Today's edition features:
• easyJet (EZJ.L)
Markets
Europe
The FTSE-100 finished yesterday's session 0.41% lower at 7,337.28 whilst the FTSE AIM All-Share index was down 0.48% at 956.05. In continental Europe, the CAC-40 finished down 0.53% at 5,152.40 whilst the DAX finished 0.58% lower at 12,381.25.
Wall Street
In New York last night, the Dow Jones fell 0.74% to 21,320.04, the S&P 500 fell 0.94% to 2,409.75 and the Nasdaq lost 1% to 6,089.47.
Asia
In Asian markets this morning, the Nikkei 225 had fallen 0.43% to 19,907.98, while the Hang Seng faded 0.36% to 25,373.8.
Oil
In early trade today, WTI crude was down 1.3% to $44.93/bbl and Brent was down 1.23% to $47.52/bbl.
Headlines
Deliveroo opens door to benefits win for gig economy workers
The food delivery firm Deliveroo has said it will pay sickness and injury benefits to its 15,000 riders in the UK if the law is changed. In a submission to the government's review of the "on-demand" economy seen by the BBC, the firm says that at present the law prevents it from offering enhanced rights because it classifies its riders as self-employed. Deliveroo says it uses that classification to provide its riders with the flexibility to work when they want. It says employment rules should be changed so that people who work for companies like Deliveroo and Uber can receive enhanced benefits and not lose that flexibility. Sources say that the firm is willing to looking at enhanced payments to riders to cover things like sickness pay - and that the money would probably be administered under a government controlled scheme similar to national insurance or pensions contributions.
Source: BBC News
Company news
easyJet (LON:EZJ, 1,347.00p) – Buy
easyJet, a low-cost European short-haul airline company, yesterday provided a traffic update for June 2017. During the month, passenger traffic increased by +11.3% year-on-year to 7.7 million customers, while the load factor improved by +0.8% year-on-year to 94.8%. The rolling 12 months traffic to June rose +8.7% to 78.1 million customers with load factor up +0.5% to 92.1%. Passenger traffic represents the number of earned seats flown, while load factor represents the number of passengers as a proportion of the number of seats available for passengers.
Our View: easyJet reported continuing strong passenger traffic and load factor data for June. The result follows May’s +9.5% growth in passenger traffic and flat load factor at 91.5%. easyJet reported its H1 FY2017 results in May, which were broadly in line with its guidance. Looking ahead, subject to normal levels of disruption, the Group said its H2 capacity growth is expected around +8.4% that seen in H1, and revenue per seat in Q3 is expected to fall by “low single digits”. The guidance for a headline cost per seat excluding fuel at constant currency for the full year is maintained at +1% increase. For the medium-term, the Group noted it remains committed to flat cost per seat excluding fuel at constant currency in FY2019 against FY2015 (FY2015: £37.44). easyJet said unit fuel cost for the H2 is likely to reduce, leading to a full year reduction in the range of £225m to £235m is expected, while adverse exchange rate movements are estimated to impact full year pre-tax profit by around £100m. At the time of H1, the Group indicated that its forward bookings for Q3 and FY2017 are encouraging at 77% and 55%, respectively (H1 FY2016: 72%, FY2016: 50%), and the management confirmed that it is on course to achieve full year pre-tax profit in line with consensus market expectations of £370m. The Shares are valued at FY2017E and FY2018E P/E multiple of 16.9x and 13.8x, with dividend yields of 2.9% and 3.5%, respectively. The Group has strong balance sheet with a net cash position of £353m at 31 March 2017 to support growth. Yesterday’s weakness in the Share price follows Guardian’s comment that easyJet’s CEO is the “leading candidate to be the new chief executive of ITV”. Beaufort retains its Buy rating on the shares, while keeping one careful eye on the oil price and international economic/political uncertainties.