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Investing.com -- easyJet was upgraded at Bernstein to Outperform with a £5.60 price target as the UK carrier offers one of the cheapest ways to benefit from Europe’s supply constrained aviation market, after missing the re-rating seen at Ryanair and IAG over the last two years.
Industry capacity remains tight as supply chain problems at aircraft manufacturers continue to hold back output.
Demand has grown faster than supply relative to pre pandemic levels, lifting fares and supporting unit economics across the sector.
Analysts said easyJet is more sensitive to this backdrop than Ryanair because of its lower margins, with airline EBIT per passenger around €5 compared with €13 at Ryanair.
Despite that, easyJet trades at its steepest ever discount to Ryanair. The stock sits at a 46% P/E discount and a 40% EV EBIT discount, far wider than the long term average of about 12% on both measures.
Analysts said the multiple gap should narrow because easyJet has greater upside to a firm pricing environment.
The negative view on easyJet is already well understood, according to the report. The carrier is entering a re fleet cycle that will lift capital spending and push free cash flow lower for several years. Analysts expect leverage to rise from net cash today to about 1x by 2030.
They argued the market has already priced this in and that the re fleet should cut unit costs, with the A320 and A321neo expected to deliver at least a 10 to 16% CASK reduction versus retiring A319 aircraft.
The analysts also highlighted the growing contribution from easyJet Holidays, which they said benefits from the company’s large customer base and low traffic acquisition costs. Holidays accounted for 38% of group profit before tax in 2025 and is expected to exceed airline earnings by 2029.
The stock trades at 6.6 times FY2 earnings on the analysts’ model. They forecast EPS growth of 22% over the next two years and 40% over five, calling easyJet an inexpensive way to gain exposure to a supply constrained European aviation market.