Broker snap: Power battles at easyJet, Prime Markets says sell

23rd Sep 2011 11:41

Prime Markets suggests selling easyJet into any strength despite the low-cost airline raising its profit guidance on Thursday.The group's expectation for profit before tax for the year ending 30 September 2011 is now between £240m and £250m compared with its previous expectation of £200m to £230m, and a market consensus forecast of £219.6m. A bumper special dividend was also announced.Prime Markets says that while the shares are currently trading below the current 100-day moving average of 342p, a retest of August lower resistance (290p) is expected within the next month.The broker highlights the recent power battle between the board and founder Stelios Haji-Ioannou (who together with his family owns around 38% of the company) and the damage it has done to the share price. "Haji-Ioannou resigned from easyJet's board last year amid demands that the airline pay dividends rather than expand its fleet, and the power battle looks set to linger on," said head of dealing Richard Curr."It is clear to the Prime Markets team where the power base really lies," Curr said, as Stelios seems to be getting his way over higher dividends. "Until the hand of Stelios ceases to be the deciding factor in Easyjet fortunes, Prime Markets will continue to rate the shares a sell into any strength."By 11:30 on Friday, shares were 1.15% lower at 336.1p.BC