Ryanair, easyJet and BA ratings cut
05.08.08
Ryanair, easyJet and British Airway all had their ratings cut by investment banks yesterday, as the aviation industry tries to cope with slow economic growth.
Credit Suisse analysts lowered their recommendation on easyJet to ‘neutral’ from ‘outperform,’ and dropped its assessment of Ryanair from ‘neutral’ to ‘underperform.’ Exane BNP Paribas has downgraded its recommendation on BA to 'underperform' from 'neutral'. The analysts also lowered their share-price estimates for the stock of each airline.
Credit Suisse London-based analysts including Gerald Khoo wrote: ‘It has become increasingly clear that the current consumer downturn is likely to be a prolonged one. The trading environment this winter is going to be a lot tougher than we had previously anticipated.’
Exane said the fundamentals remain very weak for BA and the outlook could deteriorate further. With long-haul leisure weakening, BA is increasingly dependant on achieving higher yields from long-haul premium passengers.
Credit Suisse cut its target price on Ryanair to €2.1 from €2.2 after raising its estimate for the company's debt. The analysts also dropped their target price for easyJet's stock to 350p from 425p. Exane cut its target price for BA to 170p, from 217p, saying it is too early to price in any synergy benefits from an Iberia merger or anti-trust immunity with American Airlines.
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