Liberum slashes easyJet price target

"EasyJet has moderated its capacity growth plans for Q1 (December), while retaining flexibility to match capacity to available demand," Liberum said.

The broker said it was cutting its forecasts to match management’s short-term guidance and to incorporate its assumption of a slower restoration of capacity.

For the current year, it cut its forecasts to reflect management’s guidance, for a headline pre-tax loss between £815m and £845m. Relative to the broker’s previous forecasts, revenue was better but costs worse than it had assumed. For later years, it assumes a more gradual recovery in capacity.

"The seasonally weaker winter period is always challenging for easyJet," Liberum said. "Demand is softer than in the summer and the period is usually lossmaking for the airline. This year, easyJet faces the additional challenges for Covid restrictions on both society as a whole and on international travel in particular.

"The trend in these measures is swinging towards a tightening of restrictions across much of Europe, ended the loosening phase. We see this impacting both current travel activity and forward bookings."