Liberum ups Ryanair to 'buy', cites attractive entry level

The broker said Ryanair’s "ambitious" medium-term growth plans, and its access to new aircraft deliveries, have seen it bet on a strong recovery in Summer 2022.

"Ryanair has positioned itself for a strong recovery in demand in summer 2022. Its new aircraft deliveries should allow it to gain market share from financially weaker and more cautious competitors," Liberum said. "Despite ongoing Omicron uncertainty, we see the current share price as an attractive entry level into a long-term structural winner."

More generally, the broker said the recurring theme when exiting past industry crises - of which there have been many over the last 25 years - is that the strong get stronger.

"The long-term structural winners have seen accelerated gains in the aftermath of periods of industry turmoil. Consequently, IAG, easyJet and Ryanair are our preferred picks," it said.

Liberum cut its price target on ‘buy’ rated IAG to 200p from 215p.

"The optimism that came with last November’s reopening of US-Europe routes has given way to fears of renewed restrictions, triggered by the Omicron variant," it said. "However, these have not yet impacted key long-haul routes, despite key IAG markets having a record of caution on travel restrictions.

"We remain optimistic that summer 2022 could still offer a more normal travel environment. Our recommendation remains buy, with a reduced target price of 200p."

The broker kept easyJet at ‘buy’ and lifted the price target to 800p from 680p.

"A reinforced balance sheet gives easyJet scope to seize post-pandemic opportunities as slots at key primary airports become available," it said. "We anticipate easyJet reallocating capacity and capital to areas of existing strength and strong returns. This implies better returns once capacity returns to pre-pandemic levels."