Jet2 PLC (AIM:JET2) shares fell about 2% after Panmure Liberum downgraded the stock to 'hold' from 'buy', arguing that recent gains have already captured most of the upside.
The broker left its target price at 1,980 pence, versus a closing price of 1,795p on Wednesday, reflecting a roughly 50% rally over the past three months.
One key reason for the downgrade is valuation. Panmure notes that investors are now paying nearly £9 for every £1 of expected profit and about £4 for every £1 of operating cash flow, levels that are neither cheap bargains nor compelling value drivers given only modest profit growth ahead.
In everyday terms, Jet2’s shares no longer look like a discount buy; they’ve been bid up to fair market levels.
Despite Jet2’s strong “asset-light” holiday model, high returns on capital, and a healthy balance sheet, Panmure argues that with only single-digit earnings growth forecast, there’s little room for further multiple expansion.
The combination of a stretched share price and subdued near-term profit upgrades suggests limited upside, making Hold the prudent stance for now.