easyJet (LON:EZJ) shares fell another 3% after dropping 7% on Thursday – with one of the City’s leading team of transport analysts piling on the pain.
In the wake of yesterday’s earnings alert, Bank of America Merrill Lynch’s number crunchers downgraded their recommendation to ‘neutral’ from ‘buy’. The price target was cut to £10 from £13 a share.
At 8.55am, the stock was grounded at £9 (down 33.5p).
“easyJet has a number of strengths that remain alluring,” the Merrill note starts (in rather promising fashion).
“The company has a relatively strong balance sheet, a business-oriented airport exposure (which is poised to take share over the legacy carriers in the long-term) and a well-respected CEO at its helm.
“However with a lack of pricing momentum, alongside the uncertainties facing the UK (both growth and foreign exchange; leading to management not providing typical pricing guidance) and a lack of tangible cost savings in 2017, it is hard to see how easyJet will regain its (much-needed) earnings momentum in the near-term.”
The budget airline yesterday said it had been buffeted by security fears and the weak pound.
The net impact of these and other factors will be a hit to pre-tax profits, which are expected to be in the order of £490-£495mln for the year ended September (marginally below the consensus forecasts).
That represents a near 30% fall on 12 months earlier and marks the first time in seven years the budget airline’s earnings have gone into reverse.