Ryanair PLC (LON:RYA) shares are “up with events” and so UBS has downgraded its recommendation on the budget airline.
The Swiss bank put out a note to clients saying the Irish flier remains an “industry winner” in its eyes but downgraded the shares to ‘neutral’ from ‘buy’ after they flew higher on the positive vaccine news this week.
Despite Covid-19, Ryanair's shares are back in positive territory for 2020, which the bank’s analysts attribute this to a number of factors and their associated impact on airline travel.
Firstly, investors see Ryanair “as the European structural industry winner” from the pandemic, with an investment grade balance sheet and strong liquidity, capex and restructuring plans to support growth, an experienced and stable management team and a focus on leisure short-haul rather than business flights.
“Nevertheless, we think the shares are pricing in traffic recovery and we see insufficient upside,” they added.
“We had previously assumed that testing and vaccine would be the catalyst to enable remobilisation and still see that to be the case.”
Yesterday, Bank of America Merrill Lynch raised its price target for Ryanair to €19 from €15, while also upgrading easyJet (LON:EZJ) and IAG (LON:IAG) to ‘buy’ from ‘neutral’, with easyJet’s price target hiked to 900p from 580p and IAG’s to 190p from 120p.
Goldman Sachs, meanwhile, upgraded IAG to ‘buy’ from ‘neutral’ on a price target lifted to 195p from 125p, but downgraded Wizz Air (LON:WIZZ) to 'neutral’ from ‘buy’, though with a higher target price of 4,500p, up from 3,900p.
On Tuesday Credit Suisse upped its targets on easyJet and Ryanair and Citi also took a positive stance, saying there are a number of potential silver bullets for sentiment on the horizon, including more vaccines news, a travel traffic light system, air bridges to the North Atlantic and more widespread testing