Broker snap: Credit Suisse optimistic at easyJet

16th Nov 2011 12:03

Credit Suisse has reiterated its outperform rating on budget airline easyJet, saying that the "capacity outlook inspires winter confidence".The broker said that capacity cuts at key easyjet bases (including Stansted, Malpensa and Madrid) are encouraging on pricing developments. "We think these cuts should continue to flow through as booking levels for weaker carriers disappoint, prompting late competitor withdrawals and attractive last minute fares for EZJ. As such, we think the current mid-single digit revenue per seat run rate seen by EZJ through winter can be exceeded."The broker says that the stock, trading at 9.5 times 2012 earnings, looks attractive. "We think pricing can continue to prove a positive catalyst in the short term to supplement potential double-digit medium term FCF yields." The target price is raised by 12% from 412p to 463p.However, it does warn that inflationary pressures need continued margin focus as limited upward pressure on unit costs may become more difficult as growth slows.Shares were edging higher on Wednesday, trading just 0.06% up at 356.6p by midday.BC