easyJet PLC (LSE:EZJ) shares rose 1% to 489.6p after Citi upgraded the stock to ‘Buy’, citing a clearer path to earnings recovery and improved capital returns from 2027 onwards.
Analysts said easyJet’s margins are expected to bottom out in the current financial year to September 2026, with attention now shifting to FY27, when a refreshed fleet is set to bolster its core airline operations.
Despite strong performance from its Holidays division, overall earnings have stagnated in recent years as rising airline costs weighed on margins. Citi forecasts a 27% total return and raised its target price to 600p.
“We see an easing path on the horizon,” the note said, adding that easyJet's margin outlook and fleet investments support a more constructive view over the medium term.
In its last update, the no-frills carrier reported a 52% increase in pre-tax losses to £93 million for the three months to 31 December, up from £61 million a year earlier, as investment in its Italian operations and a competitive market weighed on performance.
The airline posted a 7% rise in passenger numbers during the quarter and reported continued profit growth from its easyJet holidays unit. It also benefited from reduced disruption-related costs compared to the prior year.
Despite these gains, group performance was pulled lower by the upfront costs of expansion and price pressure in key markets.