EasyJet flies lower on Liberum downgrade

EasyJet flew lower on Tuesday as Liberum downgraded its stance on the stock to ‘sell’ from ‘hold’ and slashed the price target to 930p from 1,050p following the company’s third-quarter update last week.

It said the airline’s refusal to give any profit guidance just 10 weeks before the end of its financial year said much about the uncertain environment and the sensitivity of earnings to close-in summer bookings.

Liberum said disruption headwinds should fade next year, but yield pressure from excess industry capacity and potentially fragile consumer confidence may not.

“The group’s long-term fundamentals remain attractive, but we fear further short-term pain from earnings downgrades.”

EasyJet report a drop in a drop in revenue per seat and total revenue for the third quarter amid difficult trading that was hit by the terror attack in Brussels and the Egyptair tragedy.

For the quarter ended 30 June, total revenue per seat was down 8.3% at constant currency or 7.7% on reported basis to £54.54, while total revenue fell by 2.6% to £1.196bn as increased seat capacity was offset by the impact on yield of overall market capacity and cancellations as a result of external events.

The load factor – which gauges how full flights are – rose to 92% from 91.7% in the third quarter of 2015.

The company also said last week that the economic and operating environment remains uncertain following the UK referendum and recent events in Nice and Turkey, which have hit consumer confidence.

At 1045 BST, EasyJet shares were down 2% to 999.50p.