Easyjet still a 'buy' but turbulence prompts profit taking

12th May 2015 09:10

Easyjet's share price dropped back down to earth on Tuesday after the budget airline delivered a cautious outlook, with the market consensus stance on the stock as a 'buy' likely to come under pressure.The budget airline met its own guidance with a first-half profit before tax of £7m, compared with a loss of £53m the year before.However, the company warned that the air traffic control strikes in France - which led to 600 cancellations in April - and adverse currency movements would likely dampen full-year results."Set against a weak wider market, Easyjet's cautious comments on the forthcoming third quarter have resulted in sellers pushing against an open door," said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers."Given that the shares have risen 19% over the last six months alone, as compared to a 6% hike for the wider FTSE100, there may also be an element of profit taking in today's share price nosedive. It remains to be seen whether the current market consensus of the shares as a strong buy will equally be disturbed," he said.Numis Securities maintained a 'buy' rating on Easyjet but said it was cutting its full-year profit forecast from £691m to £660m."We would expect the share to give up a little of its recent performance today, but strategically we believe that Easyjet continues to be well placed for growth," the broker said.The stock was down 8.4% at 1,679p by 10:30.