Liberum downgrades easyJet to 'hold'

Liberum downgraded its recommendation on shares of budget airline easyJet on Tuesday to ‘hold’ from ‘buy’ as it said the risks and opportunities are now balanced.

The broker, which has a 1,000p price target on the shares, said the traffic light system for international travel confirmed by the government gave some transparency on the framework to be used, but no visibility on which countries might fall into each category.

"The risks are rising that there will remain significant restrictions on European air travel this summer," said analyst Gerald Khoo.

"We remain positive on the long-term recovery in air travel and the outlook for easyJet, underpinned by self-help structural action on costs.

"We believe concerns about the impact of aircraft sale and leaseback transactions on aircraft ownership costs are overdone, with the balance of power clearly in favour of the airlines rather than the leasing companies.

"However, at current valuation levels…we believe the long-term upside is suitably balanced by the short-term downside risks."