As Easyjet recovery takes off over summer, HSBC ups target

The bank, which held its 'buy' recommendation, raised its target price to 1,550p from 1,450p as it made small upgrades to its profit estimates after raising load factor and trimming reported yield reduction estimates, buoyed by increasing evidence that the current quarter will be a strong one.

Reported traffic and load factor data for April were strong across the board, while qualitative data on revenue per available seat kilometres from the likes of Norwegian and Transavia showed RASK clearly up.

"Absent the Easter effect we expect more moderate traffic and revenue trends in May and June. Looking to the peak summer quarter we think EasyJet will benefit particularly from its standout weak comps last year."

Disruption has been moderate so far this year and EasyJet "may be a marginal beneficiary" from the recent BA computer system meltdown.

At March's quarterly results, all carriers were upbeat about the new quarter with Wizz and IAG outright bullish with full year unit revenue guidance, though EasyJet and Ryanair were particularly cautious about the outlook for the September quarter.

"We respect this latter approach to investor communication, particularly in the context of EasyJet. The last thing a rebuilding equity story needs is a profit warning as a result of consensus estimates advancing too quickly.

"Yet we think the most likely unit revenue developments lie between the two groups."