EasyJet shares fall after RBC downgrade to 'underperform'

15th Jun 2015 09:47

Shares in budget airline easyJet fell on Monday after RBC Capital Markets downgraded the stock to 'underperform' from 'outperform' and cut its price target to 1,500p from 2,000p, noting that its positive outlook for summer has proved incorrect.It said that easyJet's outlook metrics suggest a summer lapse, with underlying third-quarter revenue per seat down around 4% and the fourth quarter likely to see flat revenue per seat."As summer is key, we see few positive catalysts until mid-2016, while easyJet faces a winter squeeze," said RBC.RBC cut its 2015-2016 earnings per share estimates by 10-13% and said that the profit growth failure in summer means the emphasis now move to winter's challenges."easyJet faces growing strategic challenges which we think have got tougher in the last two months," said RBC.Ryanair's move to further step up competition and a fall in return on equity were among the challenges cited by RBC.