Bernstein has increased its 12-month price target on Ryanair to $71.00 from $69.00, while keeping the stock at a Market Perform stance. The firm highlighted what it described as "steady progress" following Ryanair’s most recent quarterly update.
Valuation metrics cited alongside the firm’s note show Ryanair trading at a price-to-earnings ratio of 13.71 and a PEG ratio of 0.31, according to InvestingPro data, figures that the research house and the note suggest point to a relatively low multiple versus the company’s growth profile.
Ryanair’s quarterly report delivered modest top-line and cost changes. Revenue per available seat kilometer - RASK - was up 1.1% year-over-year, while cost per available seat kilometer - CASK - rose 0.8% in the same period. Bernstein attributed some of the cost relief to lower fuel costs, which supported the airline’s operating dynamics during the quarter.
Despite the firm’s characterization of the company’s guidance as "basically an in-line guide," Ryanair’s shares tumbled about 2% in the immediate aftermath of the quarterly release.
In its note, Bernstein reiterated that supply constraints remain an underpinning factor for the airline sector at large. Still, the research house signaled a preference for IAG over Ryanair, citing faster earnings growth and higher cash returns at roughly half the multiple as reasons to favor that alternative.
Ryanair has also provided several operational updates. The carrier plans to expand passenger traffic from 207 million to roughly 215 million over the coming year, a program scheduled to begin on April 1. Management decided against fitting aircraft with Elon Musk’s Starlink satellite internet service, saying that the technology would increase fuel consumption and is less appropriate given the short durations of many of its flights.
Separately, Ryanair will scale back operations at Brussels Charleroi Airport by about 10% in response to a passenger tax set to take effect in April, a move the company says will remove approximately 1.1 million seats from its existing annual capacity at that airport. The carrier also confirmed it intends to appeal a €256 million fine handed down by Italy’s competition authority, AGCM, though the firm did not disclose further details about the ruling or the underlying allegations.
On a related note, Bernstein SocGen Group reiterated an Outperform rating on EasyJet Plc., keeping a price target of GBP560.00 and pointing to elevated fares in the aviation industry that are being sustained by supply constraints.