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On Wednesday, Bernstein analysts reaffirmed their positive stance on Ryanair Holdings (NASDAQ:RYAAY) PLC (RYA:ID) (NASDAQ: RYAAY), maintaining an Outperform rating with a price target of €23.50. The analysts highlighted the airline’s enduring success and its transition from a high-growth company to one focused on cash returns. According to InvestingPro analysis, Ryanair appears undervalued at its current market price, with strong fundamentals supporting potential upside.
Ryanair, known for pioneering the low-cost airline model in Europe, continues to adhere to this approach, which has historically yielded high returns. With a market capitalization of $23.6 billion and trailing twelve-month revenue of $14.3 billion, the airline maintains its industry leadership position. Bernstein analysts pointed out that Ryanair has been the top-performing stock in the European aviation sector over the long term, thanks to its disciplined management and commitment to maintaining the lowest possible costs. This strategy has resulted in strong profitability metrics, with InvestingPro data showing a return on assets of 10.5% and an attractive P/E ratio of 13.9x.
The airline’s financial health is robust, with expectations of generating €2-€2.5 billion in free cash flow per annum. Ryanair’s balance sheet is already in a net cash position, and the company has no defined benefit pension obligations. With plans to keep between €3-4 billion in gross cash and eliminate gross debt, Ryanair aims to safeguard against economic downturns and position itself for counter-cyclical investments. InvestingPro analysis reveals an impressive overall Financial Health Score of "GREAT," with additional exclusive insights available in the comprehensive Pro Research Report.
Despite recent challenges, such as fare pressures due to distribution disruptions after cutting off Online Travel Agents, Bernstein analysts believe these issues to be temporary. They anticipate that unit economics are on the mend, reinforcing their conviction in Ryanair’s prospects. The airline’s strategy to return cash through buybacks at attractive levels remains on course, with InvestingPro data confirming management’s aggressive share repurchase activity and strong five-year returns, signaling confidence in its financial strategy and future performance.
In other recent news, Ryanair’s fiscal third-quarter net income reached €149 million, significantly exceeding the consensus estimate of €60 million, partly due to a one-off legal provision of €54 million. The airline’s full-year net income guidance for FY25 is projected between €1.55 billion and €1.61 billion, surpassing consensus estimates by 2-6%, according to BofA Securities. Morgan Stanley (NYSE:MS) has raised its price target on Ryanair shares to €22.20 from €21.40, reflecting optimism about the airline’s future earnings potential despite a forecasted reduction in passenger numbers due to slower aircraft deliveries. Bernstein also increased its price target for Ryanair shares to €23.50, citing strong fare trends and projecting annual cash returns of €2 billion.
Citi analysts reaffirmed their Buy rating on Ryanair, maintaining a price target of EUR26.00, following a 14% year-over-year increase in passenger volume for February. Ryanair’s recent traffic statistics show the airline transported close to 185 million passengers from April to February, indicating a 9% growth over the same period last year. Evercore ISI maintained an In Line rating with a $50.00 price target, noting a 1% year-over-year increase in total revenue per passenger and improved pre-tax margins. Ryanair’s operating margin for the fiscal third quarter of 2025 improved to +1%, up from -1% in the previous year, attributed to favorable settlements with Boeing (NYSE:BA) and foreign exchange gains.
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