easyJet PLC 

easyJet PLC (LSE: EZJ) is a UK-based FTSE 100 holding company that provides flights and holiday packages, primarily within Europe. The company operates through two core segments: its Airline division and its Holidays division. This Report covers the Key Recommendation Rationale, Conclusion, and Recommendation on the stock.

Key Recommendation Rationale – Sell at GBX 570.40

• Resistance near Current levels: EZJ’s stock price touched Resistance (R2) which was stated in the previous report on 20 March 2025 therefore, there can be a possibility of a decline in resistance levels. Considering the market conditions and the price action, it is prudent to exit the stock.

• Declining Revenue Efficiency (RASK down 6%): Despite an 8% rise in total revenue to £3,534 million, easyJet’s Revenue per Available Seat Kilometre (RASK) fell by 6% YoY to 5.64p in H1 FY25 (H1'24: 5.98p). This decline highlights the pricing pressure resulting from strategic capacity investments into longer-haul leisure routes and Easter timing distortions. While these investments are expected to mature, the current revenue dilution signals weaker yield control per unit of capacity.

• Widening Loss Before Tax (LBT up 13%): The group headline loss before tax widened by 13% to £394 million (in H1 FY25) compared to £350 million in H1’24, despite operating efficiencies. While the company adjusts for Easter-related seasonality (~£50 million impact), the net result still reflects pressure on profitability amid aggressive growth and cost base expansion. It raises concerns about short-term earnings resilience during high-investment periods.

• Macroeconomic Risk: The market sentiments can remain weak in the short term due to the subdued consumer disposable income, geopolitical tensions, and political risks.

Valuation Methodology: Price/ Earnings Approach

Share Price Chart  

Conclusion

EZJ is expected to trade at a discount, weighed down by several persistent challenges. These include a 6% decline in revenue efficiency (RASK), a 13% increase in headline loss before tax to £394 million (vs £350 million in H1’24), and a notable profitability drag in the core airline segment, which posted a headline LBT of £438 million. In contrast, the holidays division remains profitable. Additionally, elevated operating costs and structural burdens—including policy-related disadvantages and sustained inflation—are expected to continue constraining overall profitability.  For conducting the valuation, the following peers have been considered: Wizz Air Holdings PLC (LSE: WIZZ), JET2 PLC (LSE: JET2), etc.

Given its current trading levels, the recent financial performance, strategic investments and partnerships, market expansion and cost optimization strategies, relative valuation, and associated risks, it is prudent to exit the stock at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the Closing Market Price of GBX 570.40 as of 29 May 2025. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 29 May 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.