Ryanair Holdings PLC (LON:RYA) saw its shares rise on Tuesday after Societe Generale upgraded its rating for the Irish budget airline in a sector note pointing out that they expect news flow and earnings momentum for the firm to improve from now. The French bank upped its stance for the Dublin-based carrier to ‘buy’ from ‘hold’ with an increased target price of €14.00, up from € 12.80, pointing to its settled wage negotiation issues and discounts to its long-term average multiples.
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In a note to clients, SocGen’s analysts said: “The company has had a difficult 18 months. The rostering issue in late 2017 triggered a wave of employee unionisations across the group and resulted in strikes – something unknown to RYA previously. "That said, we think the worst is behind the company, and most wage negotiation issues have been sorted out. With cost momentum normalising and the company switching back into growth mode, we see an attractive entry point, despite Brexit related risks.” Ryanair, which is listed in London as well as Dublin, saw its shares rise 2.2% to €12.04 in afternoon trading.
But Wizz Air downgraded
Conversely, SocGen's analysts downgraded their rating for Eastern Europe-focused Wizz Air PLC (LON:WIZZ) to 'hold' from 'buy' with a reduced target price of 3,480p, down from 3,550p previously, pointing out that the FTSE 250-listed firm "trades close to its fair value and now marks the high end of airline valuations." Wizz Air shares were down 0.6% at 3,222p. SocGen kept both easyJet PLC (LON:EZJ) and International Consolidated Airlines Group PLC (LON:IAG) on 'hold', but raised IAG’s price target to 650p from 570p, while maintaining easyJet's target at 1,270p. The analysts said: "Both are good companies, in our view, but we still recommend avoiding the airlines with the highest Brexit risk.”