EasyJet Share Price Forecast September 2021 – Time to Buy EZJ?

Shares of British multinational low-cost airline group EasyJet (LSE: EZJ) have been on a roller-coaster ride of late as they remain expensive than they were last year this time. Many investors are wondering whether EZJ can continue to surge as evidenced by it closing 3.8% higher on Monday. The shares are currently trading around the 662.6p range. There are even rumours that cash-rich rivals such as Ryanair are waiting in the wings to acquire EasyJet. So is EasyJet worth adding to one’s portfolio? Let’s find out.

EasyJet – Technical Analysis

According to the financial statement released by EasyJet, the market cap of the company is at £4.756 billion with total assets worth £8.308 billion. Revenue for 2020 was at £3.01 billion with a profit margin of -35.86% compared to £6.38 billion in 2019.

Oscillators for EasyJet such as Relative Strength Index (14)(52.9), Stochastic %K (14, 3, 3)(72.9),  Commodity Channel Index (20)(31.4) and Average Directional Index (14)(18.4) are neutral. On the other hand, moving averages such as Exponential Moving Average (10)(629.1), Simple Moving Average (10)(611.9), Exponential Moving Average (20)(640.2), Simple Moving Average (20)(644) are indicating a buy action.

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Recent Developments

EasyJet announced earlier in the month that it has received a takeover offer from an unnamed rival which was widely reported to be Wizz Air. The uncertainty created by this piece of news led many investors to lose confidence, which resulted in share prices decreasing for a while. EasyJet is currently in the process of raising funds from shareholders as the company has announced plans to raise £1.2 billion via a rights issue. It will allow participants to acquire 31 shares for every 47 they own. This will be issued at a 35.8% discount to the expected market price.

The rights issue can be used by the company to better position itself to grow when conditions become more favourable. This could result in the company acquiring more airport slots, reduce debt or buy back shares which could increase the share price. EasyJet has appointed Stephen Hester as a director and chair designate who joined the organisation with immense experience that could help the airline recover over the coming months and years.

Should You Buy EZJ Shares?

Investors should consider two things when looking at EasyJet. EasyJet shares rose last week when the UK government announced changes to its travel restrictions. EasyJet share grew today on the back of news that the US was about to lift its travel ban. There could very well be scope EasyJet’s share price to keep soaring. However, there are other factors that could force the shares back into a tailspin. The biggest concern is the worsening of the coronavirus and the company’s need for additional fundraising in the future.

It is likely that EasyJet is preparing itself for another year of lackluster travel trends as winter approaches and the delta variant continues to spread. It has already a net debt of £1.1 billion on its book. The extended revenue pressure can also be influenced by a sharp rise in fuel costs of oil supply issues grow.

EasyJet has undoubtedly a bright future as the low-cost travel segment has room for growth. However, the Coronavirus has caused uncertainty in the short-to-medium future of the company. EZJ shares are trading with a P/E ratio of 32 times which doesn’t offer an attractive risk to reward balance for any portfolio. Considering all of these points, investors should ignore EasyJet for the time being.

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