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

Shares of British multinational low-cost airline group EasyJet (LSE: EZJ) are in the red today, after closing at £548.4 as of November 22^nd (18:00 GMT). The shares have dropped more than 30% in the last 6 months and 7.5% just in the last year. The company has been experiencing a rights issue and headline losses in the last fiscal year.

EasyJet – Technical Analysis

EasyJet’s financial statement reveals a market cap of £418.894 billion with total assets worth £830.8 billion. Revenue for 2020 was at £300.90 billion with a profit margin of -35.86% compared to £638.50 billion in 2019.

Moving averages such as Exponential Moving Average (10)(581.4), Simple Moving Average (10)(588.1),  Exponential Moving Average (20)(598.0), Simple Moving Average (20)(605.8), and Exponential Moving Average (30)(608.2) are indicating a sell action. Oscillators such as Average Directional Index (14)               (20.4), Awesome Oscillator(−43.0), and Momentum (10)(−102.0) are neutral.

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Recent Developments

Since its establishment in 1995, EasyJet has expanded via a combination of acquisitions, and base openings fuelled by consumer demand for low-cost air travel. The airline operator now operates more than 300 aircraft with 29 bases across Europe, the largest being Gatwick. The company became involved in a dispute with its owner and largest shareholder, Stelios Haji-Ioannou in April 2020, who criticized the airline’s decision not to seek to cancel the outstanding Airbus order during the pandemic. The airline operator was also forced to close three bases in Stansted, Southend, as well as Newcastle from the end of August due to low levels of air travel demand.

This September, EasyJet went ahead with their rights issue which resulted in over 300 million shares listed (at 410p). Share prices have fallen as a result due to such a great increase in outstanding shares. EasyJet has also estimated that it will record pre-tax headline losses of between £1,135-1,175m this fiscal year, which is a 36 to 40% increase from last year. While poor financial results have been a sector-wide problem, EasyJet shares have underperformed due to its rights issue. However, not all is lost, as EasyJet has decreased its cash burn to around £36 million per week, far lower than estimates of £40 million per week. The company’s net debt has also fallen to £900 million while it has access to £4.4 billion of liquidity.

EasyJet has a strong brand presence amongst investors and passengers alike which was further bolstered by its recent rejection of a takeover from low-cost Hungarian operator Wizz Air. The company was back to almost 58% of its 2019 capacity. It expects a headline loss for the year of between £1,135 million and £1,175 million.

Should You Buy EZJ Shares?

Investors have enough reasons to be optimistic for the share price. As the travel sector is reopening, the company has reported positive booking momentum for Q1 of FY21. This reflects the UK government’s announcement to remove certain travel restrictions. Consumer demand will continue to rise benefitting airline shares UK government’s announcement to remove certain travel restrictions. The company’s operating capacity has also increased from 17% (of FY19) in Q3 to 58% in Q4.

Investors can rest assured as EasyJet has successfully mitigated the effects of the pandemic, despite such achievement not being reflected in share price. It is also is well-positioned to deal with increased consumer demand across FY21 largely fulfilling managerial aims to lead the recovery. Considering all of these, there is a lot of upside potential for EasyJet’s share price. While its short-term future seems volatile, investors can buy EZJ shares for the long term.

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