Broker snap: Fuel concerns at easyJet

25th Mar 2011 10:34

Credit Suisse slashes the target price of budget airline easyJet by 32% after accounting for higher fuel prices and limited growth next year. A 'neutral' stance is retained.The new target price stands at 330p, down from 464p, after factoring in jet fuel at $1,050/mt for unhedged fuel requirements. The broker also cuts its pre-tax profit 2011 estimate by 20% to £175m, and reduces its 2012 forecast by 32% to £186m.Credit Suisse thinks that the weakness in UK and European consumer spending will restrict the airline's ability to raise its prices to pass on these higher costs.Additionally, the broker notes that increased business traveller traction will take time to build, while a likely two-three year unit crew cost reduction programme limits ex-fuel unit cost cutting potential in 2012.BC