easyJet has received an upgrade from UBS ahead of the airline’s first-half trading update on 18 April.
Jet kerosene price rises have lagged crude oil rises, although easyJet has hedged 55% of its second-half fuel requirement and might have increased that again to 70-80%.
March-quarter fare price increases aided by Easter could be double-digit vs mid-single digits guidance while geopolitics will have less of an impact.
Travel demand might be another kicker with package holiday bookings strong and summer bookings of over 60% already secured.
“With c25% of profits expected from easyJet holidays, we think the value of easyJet Holidays is not reflected in the share price.
“Furthermore, we see scope for easyJet to be a pan-European package holiday operator using its asset-light model. “
Buy is the rating with a price target now of 850p from 820p.
For the half year, UBS predicts revenue per seat up by 10% (vs guidance mid-single digits) and first half losses at minus £379 million (vs consensus at -£399 million.)