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Investing.com - Bernstein SocGen Group has raised its price target on Ryanair (NASDAQ:RYAAY) to EUR28.00 from EUR27.00 while maintaining an Outperform rating on the stock. The airline’s shares have shown remarkable strength, delivering a 38.81% return year-to-date. According to InvestingPro analysis, the stock appears undervalued, with multiple analysts revising earnings expectations upward.
The Irish airline is showing strong performance with significant fare growth in the first fiscal quarter. Fares increased compared to both last year and the 2023 period, which was characterized by high "revenge travel" demand. This growth has contributed to the company’s robust 9.24% revenue growth and healthy 28.86% gross profit margin.
Cost control remains effective at the airline, with unit costs excluding fuel (CASKx) increasing only 1.6% in the quarter. Bernstein noted that Ryanair’s current guidance may be "slightly on the conservative side" for both cost and revenue projections.
The research firm pointed out that management is guiding for fares to decrease on a two-year comparison for the second fiscal quarter and full year, despite signs of continued strong demand that could potentially keep fares flat.
Bernstein expects non-fuel unit costs to rise 3-4% this year, but cheaper fuel costs should help offset this increase, keeping total cost growth just below management’s guidance range of 1% to 3%.
In other recent news, Ryanair Holdings PLC reported that it carried 19.9 million passengers in June, marking a 3% increase from the same month last year, while maintaining a steady load factor of 95%. The airline also faced disruptions due to a strike by French air traffic controllers, leading to the cancellation of 170 flights. Analysts have been adjusting their outlook on Ryanair, with Bernstein raising its price target to EUR66.00, citing a positive summer fare outlook despite past fare declines. Redburn-Atlantic also increased its price target to EUR28.00, highlighting Ryanair’s strong operational performance and competitive cost position. Bernstein SocGen Group raised its price target to EUR27.00, noting Ryanair’s plans to return cash to shareholders with a €750 million buyback. This move comes as the company manages €2 billion in debt. These developments reflect a mix of operational challenges and strategic financial maneuvers for Ryanair.
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