Analysts at Liberum Capital have trimmed their price target for easyJet PLC (LSE:EZJ) to 430p from 460p after lowering earnings estimates following a recent trading update.
But they reiterated a 'buy' rating on the budget airline operator, stressing there is "long-term value beyond short-term uncertainty".
In a note to clients, the City broker's analysts said: "Concerns about the cost of living squeeze and a potential recession impacting demand are overstated. So far, there are no signs of demand softening, although visibility for summer 2023 is very limited."
They added: "It may be that the shares continue to struggle until there can be confidence in summer trading, but the balance sheet is strong, and the valuation is undemanding and not reflective of recent structural improvements."
On Thursday, easyJet reported a strong performance in its fourth quarter with EBITDAR of between £665mln to £685mln, in line with the same period in 2019, although it still expects to make a loss before tax for the year of between £170mln and £190mln.
In the trading update for its full year to September 30, 2022, the FTSE 100-listed firm said its full-year loss includes around a £64mln non-operating, non-cash forex loss from balance sheet revaluations together with around £75mln of extra disruption costs when compared to 2019, reflecting disruption across the industry in the third quarter.
The impact of the Omicron COVID-19 strain, the war in Ukraine, and the industry-wide issues experienced this summer all affected operational performance during the financial year, the group said. As a result, easyJet said it will not be paying a dividend for the year.
But looking ahead, easyJet said it expects capacity in quarter one 2023 to be up 30% year-on-year to around 20mln seats, around 83% of pre-COVID-19 levels, with booked load factors ahead of the same point in 2019, while yields remain robust.