EasyJet Shares Take Off: JPMorgan Trims Target, Sees 30% Upside

EasyJet shares (LON:EZJ) are rallying today, up 6.5%, as the falling oil price helps the airline shares climb. With oil being one of the largest costs for airlines, the falling price on the Middle East ceasefire has in fact fuelled London listed airlines, as IAG and WIZZ also trade firmly higher on the day.

JPMorgan analyst Harry Gowers yesterday reaffirmed an “Overweight” rating on the stock, albeit with a reduced price target of 700p, down from the previous 730p.

Despite the cut, Gowers' analysis suggests a potential upside of nearly 30% from current levels, signaling continued confidence in the airline's long-term prospects.

The revised price target from JPMorgan reflects a nuanced perspective on easyJet's potential. While maintaining a positive outlook, the firm acknowledges the challenges facing the airline industry, including fluctuating fuel costs and intensifying competition. The reduction in the target price likely factors in these external pressures, as well as potential internal adjustments within easyJet's operations.

Broader analyst consensus echoes a generally optimistic view, albeit with varying degrees of enthusiasm. The average 12-month price target from nine Wall Street analysts stands at 697.32p, with a high estimate of 900p and a low of 575p. This suggests that while JPMorgan's target may be more aggressive, the overall market sentiment remains positive.

EasyJet's financial health is a key determinant of its future performance. The company recently announced its earnings on May 22, 2025, and analysts forecast an Earnings Per Share (EPS) of approximately 67.34p for the current year. This figure will be crucial in assessing the airline's profitability and its ability to navigate the competitive landscape.

The reinstatement of dividend payments, while a positive sign of recovery, remains modest. The forecasted 4.5p dividend, representing a 0.9% yield, pales in comparison to pre-pandemic distributions. Analysts anticipate limited dividend growth in the medium term, with yields expected to reach only 1.46% by 2027. This cautious approach to capital allocation underscores the company's focus on strengthening its balance sheet and investing in operational improvements.

EasyJet's ability to manage fuel costs and maintain competitive pricing will be critical to its success. The airline's hedging strategies provide some protection against fuel price volatility, but margins remain vulnerable to any sustained increases if events change. Moreover, the expansion of routes and capacity by both traditional carriers and low-cost rivals could put downward pressure on ticket prices and profitability.

Despite these challenges, easyJet possesses several strengths that could drive future growth. Its strong brand recognition, extensive route network, and focus on cost efficiency position it well to capitalize on opportunities in the European aviation market.