RBC lifts forecasts for Ryanair, keeps at 'outperform'

RBC Capital Markets has lifted its target price for budget airline Ryanair after upping its forecasts on the back of lower fuel cost projections.

The broker has raised its target for the shares from €24 to €25 and kept an 'outperform' rating on the stock.

Ahead of the carrier's full-year results next month, RBC has raised its earnings estimates by around 2% over the next two years to "reflect a reduction in fuel costs since our last update".

RBC is now forecasting adjusted diluted earnings per share of €1.66 in the year ended 31 March, rising to €2.23 for the current year, compared with the €1.25 reported last year.

"We see Ryanair as a relatively low risk airline share, both due to its more certain/sustainable growth prospects and strong balance sheet, with a >€600m adjusted net cash position at FY2023/24E," RBC said.

"Low leverage arguably cuts both ways and leaves Ryanair less levered to the positive outlook which we see for European airlines. However, it also offers across-the-cycle attractions in a cyclical industry with limited earnings visibility. It also offers capital allocation optionality including the option to buy aircraft with cash rather than pay increased lease rates."

The stock was up 2.63% at €21.07 by 1507 BST.