A leading investment bank has taken a ‘more constructive view’ on shares in easyJet PLC following the budget airline’s £1.2bn cash call.
While Stifel dropped its price target for the stock to 600p from 650p to reflect the dilutionary effect of the rights issue, it moved its recommendation to ‘hold’ from ‘sell’.
It sees trading remaining benign despite the additional fuel costs that are hitting the sector and the threat posed by the latest Covid variants.
However, longer-term it spies some threats: “We still expect structural margin pressure and negative FCF [free cash flow] for years to come due to upside pressure on costs and downside pressure on yields at the same time.”
The stock, off 32% in the last six months, was trading changing hands for 593p, almost flat on the day.