easyJet shares to 'pause for breath', says Panmure

28th Mar 2014 11:29

Panmure Gordon has raised its earnings forecasts for easyJet after an 'encouraging' trading update from the budget airline this week, but has left its 'hold' rating and 1,800p target price for the stock unchanged.While it remains "hugely optimistic" about easyJet's long-term prospects, the broker expects the shares to "pause for breath" in the near term.easyJet on Wednesday improved guidance ahead of its half-year results in May and now expects the pre-tax loss to be £55-65m for the six months to March 31st, compared with the previous estimate of £70-90m. Revenue per seat at constant currency is now estimated to have grown by 1.5% in the first half, compared with its earlier prediction of "very slightly up". Expected cost per seat growth excluding fuel was also revised down.Panmure said that due to "improved revenue numbers and with costs firmly under control", it has upgraded its earnings per share (EPS) forecasts for the full year ending September by 3.7% to 113.6p."Despite a likely increase in competition this summer, we have seen few signs of irrational behaviour of competitors, and we expect the revenue environment to remain relatively good," the broker said."Increased yield management of allocated seating should in our view support modest yield improvements over the next couple of years. Our EPS forecasts have also benefited from the assumption of the lower tax rate, reflecting company guidance."The stock was down 0.35% at 1,705p by 11:28 on Friday.BC