Broker tips: Easyjet, Atalaya Mining

Analysts at Berenberg lowered their target price on low-cost carrier Easyjet from 850.0p to 800.0p on Wednesday but upgraded their recommendation for the group's shares to 'buy' as a result of flyer confidence creeping up.

Berenberg said a recent increase in consumer confidence around flying had done little for the group's share price, noting the company had actually performed more in line with its distressed flag carrier peers and that its asset valuation and earnings discounts had hit "extreme" levels.

The German bank stated that booking activity for near-term travel had steadily increased in July, with fare-scrape data suggesting that Easyjet priced close-in bookings aggressively in June.

"If maintained, this would add revenue confidence even as demand slows heading into early winter. While resurgent Covid-19 infections pose the risk of a false start, we have yet to see evidence of sliding bookings, as experienced by US carriers," said Berenberg.

However, Berenberg did highlight that Easyjet's higher breakeven load factor did merit conservatism in the group's capacity restart.

"We expect Easyjet's third-quarter interim management statement to highlight slow demand progress. Many airlines' messaging, in our view, will reinforce a positive feedback loop by outlining customer safety and comfort, areas in which easyJet excels."

Analysts at Canaccord Genuity hiked their target price on metals and mining group Atalaya Mining from 200.0p to 290.0p on Wednesday, singling out the firm's "outstanding" recovery leverage.

Canaccord made upward revisions to its copper price forecasts, given the faster than previously expected recovery in copper markets over the past quarter.

For Atalaya, the leverage to increased copper prices was "significant", said Canaccord, which expects a "gentle recovery" in copper pricing to drive strong underlying earnings growth for the group over the next two years.

The Canadian broker added that the increase in near-term cash flow as a result of the copper price changes also had a material impact on its target price, which was derived through a combination of underlying earnings growth and price-to-net asset value.

"As outlined in our recent detailed report, we see Atalaya as a high-quality stock, with strong leverage to the rebounding copper price," said the analysts, which also kept their 'buy' rating on the group unchanged.

"Furthermore, we believe Atalaya's attractive growth (and life extension) options are under-appreciated by the market."