EasyJet: Better Wait Before Buying FTSE Member Airline Stock

This article was written in English on 16.04.2021, translated and published on this site.

In the first weeks of the epidemic, most market participants avoided travel and leisure shares, especially airlines. However, with the improvement in investor sentiment towards the economy, the share prices of these companies have also recovered.

For example, the indexes and have increased by over 17.4% and 29.3%, respectively, since the beginning of the year. Since the beginning of the year American Airlines (NASDAQ:), Delta Air Lines (NYSE:) ve United Airlines (NASDAQ 🙂 shares gained over 39%, 16% and 29% respectively.
It was also among the most traded stocks in airline companies and indices in the UK. Today, with an FTSE 250 member EasyJetWe will examine (LON 🙂 (OTC :). EXJ stock has gained 35% in the past 12 months and nearly 11% since the beginning of the year. Shares closed April 15 at 990p. ($ 13.80 for US-based shares). The company has a market value of £ 4.5 billion ($ 6.2 billion).

EasyJet Weekly Chart

A Low Priced European Airline

Luton-based EasyJet; It offers local and international travel services on over 1,000 routes in more than 30 countries through its affiliates EasyJet UK, EasyJet Switzerland and EasyJet Europe.

Almost 50% of the population in the UK received the first dose of COVID-19 vaccines, and there was a drastic drop in the number of new cases. So the country is in the process of gradually re-opening its economy.

But for budget-friendly airlines like EasyJet, international travel, especially in Europe, is still a question mark. Some important countries such as Germany and France vaccinated around 20% of their populations. So it may take some time to lift the travel restrictions, which could hurt EasyJet’s once again efforts to generate income.

Another concern for EasyJet and other low cost airlines is the need to check passengers’ vaccination status. Owner of British Airways International Consolidated Airlines Group Large airline companies such as (LON 🙂 (OTC 🙂 can more easily create personnel structure and systems to provide these controls.

On the other hand, EasyJet may see some drop in demand due to expensive COVID-19 testing requirements. As the price of test kits can reach up to £ 100 ($ 138) (which is more expensive than a low-priced airline ticket), travel is only in demand among wealthier travelers. With the recent relaxation of restrictions in the UK, “budget” holidays may be done locally, rather than abroad, this summer.

After the dramatic rise in price over the past year, potential investors need to ask: How much can the stock go up under current conditions?

The UK government will announce its plans for international travel at the beginning of May, and this date is important for airline shares. Positive news could act as a catalyst to push the stock price above 1,000 p. On the other hand, new bad news for the industry could mean selling profits.

Result

While travel remains at very low levels, especially internationally, the travel industry is making great efforts to adapt to the new realities of life. But in the past few months, airline shares have benefited from an improvement in investor sentiment.

However, given the uncertainty about European travel during the summer months, we would not have preferred to buy EasyJet or any other airline stake at current levels. Recently, Liberum has lowered its rating for EZJ stock from ‘buy to’ hold. 950 p for the EZJ share. or a downside to lower improves the margin of safety for long-term investors.

Finally, investors who are interested in EZJ shares but do not want to invest all of their capital in a single share may consider purchasing an exchange-traded fund (ETF) with those shares. Examples:

  • Invesco FTSE RAFI Developed Markets ex-US ETF (NYSE :): + 11.7% since the beginning of the year;
  • US Global Jets ETF (NYSE :): + 18.7% since the beginning of the year.

Note: If you are interested in the financial products mentioned above but cannot find these products in your area, you may want to contact your broker or financial planner.

You can contact me for any questions or comments.

Editor’s Note: Not all assets analyzed may not be available in all regional markets. Please contact an authorized brokerage firm or financial advisor to find similar financial instruments that may suit you. This content is for informational purposes only. Before making any investment decision, you should do your own detailed research.

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