RBC Capital lifts Jet2 price target

RBC Capital Markets lifted its price target on Jet2 on Thursday to 2,000p from 1,950p following the company’s trading statement a day earlier.

The bank said it was making minor changes to profitability forecasts and incorporating Jet2's FY24 gross cash position of around £2.3bn, which was ahead of its previous expectations of £3bn.

This drives the increase in the price target, it said.

"The modest increase in our PT is more notable in the context of Jet2's share price decline yesterday," it said.

RBC noted the shares fell after the trading statement, with commentary on summer 2024 pricing prompting concern.

Jet2 said in the statement that booked to date pricing for Summer 2024 was showing a modest increase, although recently, pricing has been more competitive, particularly for April and May departures.

But RBC said it wasn’t concerned by the summer 2024 pricing commentary and that its FY24/25 holiday/ticket yield forecasts up around 2.5%/2.7% are not significantly changed.

It also said the valuation remains attractive.

"Considering valuation on an average of the EV with and without deferred revenues, Jet2 trades on circa 4x 24/25 EV/ EBIT below easyJet on circa 6.2x 24/25 EV/EBIT (on the same basis) on our forecasts, both at a discount to European ultra-low cost carriers," it said.