EasyJet flies higher as JPMorgan says it's a 'high conviction' overweight

(Sharecast News) - EasyJet flew higher on Wednesday as JPMorgan Cazenove highlighted the stock as "a high conviction" 'overweight' in the low-cost carrier space. It noted the shares are flat this year despite more resilient pricing and earnings than peers. JPM said it currently sees a "cleaner" pathway to high earnings growth in September 2025.

In a broader note on the sector, JPM said that as the sun sets on summer and it looks ahead into the final quarter, it sees a buying opportunity into winter for the European airlines sector.

"The sector has started to inflect upwards over the past month, however, remains a large underperformer versus the market this year, due to concerns over softer passenger demand as pricing has begun to normalise for the first time post pandemic," it said.

The bank said sector risk-reward now looks positive, which could lead to continued seasonal outperformance in Q4.

"Lower fuel and normalising (rather than collapsing) pricing means we currently see a high likelihood of margin expansion into next year versus depressed (peak cycle) multiples," it said.

JPM double-upgraded Air France-KLM to 'overweight' from 'underweight' and said it sees a potential inflection in earnings momentum into 2025E set against a historically low share price.

The bank said it's "currently agnostic" within airlines as to Network versus low cost carriers.

At 1130 BST, easyJet shares were up 1% at 515.30p.