Broker snap: CS still likes Ryanair despite cutting estimates

10th Aug 2012 13:28

Credit Suisse has trimmed its earnings estimates for Ryanair, the pioneer of the 'anything extra costs more' airline model, after the Irish firm's first quarter figures came up short.The Swiss bank is cutting its earnings forecasts by 7%-16%, resulting in a cut in the target price to €4.75 from €4.85, but is sticking with its "outperform" rating, pointing to an attractive relative to rival no-frills operator easyJet.Credit Suisse thinks Ryanair could deliver a guidance upgrade in November, whereas easyJet "may be cautious into winter at the start of a new financial year.""Our analysis provides strong support for our argument that Ryanair should enjoy a partial reversal of its recent under-performance of easyJet over the coming months," claims Credit Suisse, though it remains positive on easyJet relative to the sector as a whole.The share price of easyJet has outperformed Ryanair by 70%-80% on a one-to-three year basis, Credit Suisse notes, and the lowered expectations provide a buying opportunity in the bank's view.