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Investing.com - Bernstein SocGen Group has upgraded EasyJet Plc. (LSE:EZJ) from Market Perform to Outperform, while raising its price target to GBP5.60 from GBP5.20.
The upgrade comes as Bernstein notes EasyJet has not participated in the re-rating enjoyed by competitors Ryanair and IAG over the past two years, despite favorable industry conditions that should benefit the airline.
Bernstein highlights that as a lower-margin airline, EasyJet has more leverage to the supply-constrained industry backdrop than Ryanair, yet trades at a steeper discount than at almost any time in the last decade.
The firm believes that headwinds such as rising capital expenditure and constrained free cash flow are already well-understood by the market and reflected in the current share price.
Bernstein also points to EasyJet’s re-fleeting initiative as a positive factor that should improve the airline’s relative unit cost position going forward.
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