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easyJet could be acquisition target after Brexit, says Kepler as it cuts to ‘reduce’

The French bank also predicted a 20% drop in pre-tax profits for the budget airline in 2020 as higher fuel costs and slowing capacity growth began to bite

easyJet plc - easyJet could be acquisition target after Brexit, says Kepler as it cuts to ‘reduce’
The UK is easyJet's largest market

easyJet PLC (LON:EZJ) could become a takeover target following Brexit, according to analysts at Kepler Cheuvreux as they downgraded the carrier to ‘reduce’ from ‘hold’ on Tuesday.

In a note, the broker said that the FTSE 250 budget carrier could attract buyers once the UK had exited the EU and its contingency plans had been “tested”, however until then the stock would trade on the group’s profitability, which may be impacted by expectations of slower growth in 2020.

READ: easyJet flies higher as it insists full-year profits will be as expected

Analysts also cut their target price to 820p from 1,200p and revised their 2020 pre-tax profit forecasts to reflect an expected decline of 20% to £350mln.

Kepler cut its capacity growth expectations for 2019 to 3% from 5%, saying that demand from the UK, easyJet’s largest market, could be impacted by Brexit.

They added that this decline in capacity growth would make it “more difficult” to achieve an improvement in non-fuel costs in the next year, although they did not factor in any potential impacts from Brexit.

The downbeat assessment sent easyJet’s shares down 4.2% to 914.8p in late-morning trading.

Quick facts: easyJet plc

Price: 1463.5 GBX

LSE:EZJ
Market: LSE
Market Cap: £5.81 billion
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