Budget airline easyJet PLC (LSE:EZJ) was downgraded by JPMorgan due to concerns about weaker pricing in a competitive market.
The FTSE 100 company in July warned of higher costs in the second half, along with slower growth and impacts from air traffic control strikes.
Earlier this month, airline sector shares all flew lower after Jet2 cautioned that a trend for later booking had become more pronounced, leading it to expect profits at the lower end of expectations.
Ahead of the airline’s fiscal year results due in late November, JPMorgan analysts placed easyJet on 'negative catalyst watch' on Tuesday due to worries about weaker pricing continuing into the winter, against the backdrop of a saturated UK leisure market.
With rivals such as Ryanair also expanding capacity, the analysts cited easyJet's increasing capacity growth and consumer uncertainty surrounding the UK budget.
The US bank's rating was cut to 'neutral' from 'overweight', with the share price target lowered to 500p from 670p.
Analysts said easyJet may find it difficult to reduce winter losses, forecasting that first half losses will worsen in the next financial year.
For all that, the shares, having fallen 15% so far this year, are not seen as expensive at circa 7.0 times 2026 forecast earnings.