Where’s the easyJet share price going next?

Charlie Keough — Thu, 28 Apr 2022 09:29:33 +0000

The last few years have seen the easyJet (LON: EZJ) share price falling sharply. Currently sat at 565p, this is a major drop from its price before the pandemic struck the market in March 2020.

However, the stock has shown signs of potential in recent times. And since early March the easyJet share price is up over 25%. So, will this upwards trajectory continue? Or should I be steering clear of it? Let’s explore.

Strong travel expectations

One positive for easyJet is that it should be able to capitalise on rising demand as more countries continue to remove travel restrictions. Examples of this include Italy, which recently dropped its ‘state of emergency,’ while from early May, Greece will join the growing list of restriction-free European countries. As a result, easyJet recently announced that demand for summer bookings over the past six weeks has exceeded that of the same period in 2019. Given the struggles it has experienced through the pandemic, this is great news for the firm.

On top of this, easyJet recently posted some solid results. The firm has managed to reduce its net debt from £900m to £600m, while March saw 80% passenger capacity compared to March 2019. It also stated that 64% of fuel for the second half of the year is hedged at $571 per metric tonne, partially offsetting the impact of current rising fuel prices. These results show the business is moving in the right direction post-Covid, as it edges closer to full capacity in the near future. As a potential investor, these are pleasing signs.

easyJet concerns

However, rising fuel costs should still be of concern to easyJet. While hedging 64% of fuel may provide some short-term protection, the increase we’re witnessing will still have a big impact on the business. Should this eat into revenues, I’d expect to see a fall in the easyJet share price.

And it’s not just the cost of fuel that’s on the rise. With inflation soaring, people are seeing a sharp cost of living increase. While the business is experiencing high demand, a continuation of the rise could see future bookings impacted. This could have negative connotations for the firm and its stock.

The disruptions easyJet has recently been facing will also impact it. In some bases, up to 20% of staff have been off work due to rising Covid-19 infections. And earlier this month, it cancelled over 200 flights in one weekend. This is expected to continue to later into the year. When considering buying easyJet shares, this is a concerning factor.

So, where is the easyJet share price going next?

Where the easyJet share price goes next depends on a few factors. If it continues with its strong progress post-Covid, and if demand continues to rise, I think easyJet could have a strong finish to the year. However, despite the progress it has made, I see it struggling in the months ahead. Rising fuel costs, inflation, and Covid-19 cases could see the firm suffer. And as a result, I won’t be buying the shares just now.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The easyJet share price is down 38% in a year. Here’s what I’m doing now!

Charlie Keough — Wed, 02 Mar 2022 09:51:29 +0000

The last 12 months have seen the easyJet (LSE: EZJ) share price fall 38%. And it’s down over 20% in the past six months alone. Like many of its peers, the stock has been hit hard during the pandemic, with the firm’s operations being brought to a halt for a large chunk of the last two years.

However, recent times have provided the business with optimism. More countries are ditching their restrictions in return for normal procedures. As such, should I be buying easyJet stock at the current price? Let’s take a look.

Encouraging results

Well, the outlook for easyJet certainly seems to be improving. The firm’s latest results for the three months to 31 December 2021 showed that revenue for the quarter stood at £805m. When compared to the £165m recorded for the same period in 2020, it is clear easyJet has taken large strides since the worst of the pandemic. Further, while the company still reported a loss, it was nearly half (£213m) of the £423m seen last year. And if this loss continues to be cut, I’d imagine this will lead to a rise in the easyJet share price.

We can also expect to see higher passenger volume in 2022. And this will provide easyJet with hope for the months ahead. As I recently mentioned in an article where I stated how I would buy shares in easyJet competitor IAG, passenger volume is expected to reach 3.4bn in 2022. This is nearly twice as high as 2020. This rise in volume is due to the reopening of borders globally, as more countries have dropped restrictions to allow smoother travel.

As I also mentioned, easyJet may have an edge over competitors with its cheap flight deals. As eager passengers look to potentially fly out for budget holidays, the firm is in a prime position to capitalise on this. I think this part of the business could excel in the next few months. And the share price could rise as a result.

easyJet share price headwinds

There are a few risks I must account for, however.

Firstly, while we seem to be coming to the end of the pandemic, an emergence of a new strain could potentially place us straight back in it. Any sign of this would have negative connotations for the easyJet share price.

Secondly, the price of jet fuel may increase because of the Ukraine conflict. The fear of decreasing supply could have a negative impact on the company’s operation. Costs will likely rise in the coming months.

What I’m doing

Despite the risks associated with easyJet, I think the outlook is bright for the firm. While its latest results show the business is heading in the right direction, what we can expect to see in 2022 will only bolster these figures. I also think that as consumers look to jet off for the first time post-pandemic, cheap options such as easyJet will be in high demand (this certainly applies to me). As such, I would be willing to buy easyJet stock today.

The post The easyJet share price is down 38% in a year. Here’s what I’m doing now! appeared first on The Twelfth Magpie.