Broker snap: Credit Suisse hikes easyJet forecasts after Q1 beat

24th Jan 2013 09:27

Credit Suisse has hiked its target price for easyJet from 884p to 1,000p after raising its full-year profit forecasts following the budget airline operator's first-quarter results.Constant-currency revenue per seat (RPS) rose by 8.0% in the first quarter, ahead of Credit Suisse's +5.0% forecast, while the company's first-half guidance now points to a 6-8% RPS increase, compared with the previous 'low-mid single-digit' growth target.Total revenues in the first three months were up 9.2% at £833m, better than Credit Suisse's £822m forecast. Meanwhile, the company said that it would likely record a pre-tax loss of £50-75m in the first half, better than the £100m loss expected by Credit Suisse.Taking this into account, along with a lower-than-expected unit fuel bill and FX impact, the broker has raised its full-year profit before tax forecast by 9% to £397m.Despite the first-quarter beat, the broker has retained its 'neutral' rating on the stock, even though easyJet trades at a 17% discount to its three-year average (at 11 times earnings).Credit Suisse said: "Trading momentum has remained strong into winter, and this should be rewarded by a strong share price reaction. However following a 100% 12-month outperformance of the FTSE All Share Index, we see greater upside surprise potential at Ryanair, Deutsche Lufthansa and IAG in 2013."Shares were up 3.68% at 886.5p by 09:54 on Thursday.BC