easyJet, BA and Ryanair shares slide on bank downgrades
10.05.08
The persistent strength of the price of oil, which passed $126 a barrel yesterday, saw banks downgrade the shares of easyJet, British Airways and Ryanair. BA's shares fell 10.25p to 228.25p, easyJet was down 15p at 285p and Ryanair fell 11c to €2.89.
Cazenove analysts revised their rating on BA's shares to ‘underperform’ from ‘in-line’, saying ‘Until there is some respite in the relentless rise in the price of oil and / or some greater investor confidence in the outlook for demand, we believe that the sector will struggle to outperform on a 6 month view.'
The investment bank added that easyJet, which it moved to ‘in-line’ from ‘outperform’, remains its ‘favoured pick in the sector’. However, it said: ‘For the time being, share price performance is in thrall to the oil price and to a general sense that the resilience of forward books must eventually weaken in the face of a slowdown in economic growth in the UK and, eventually, Europe.’
Fellow investment bank Merrill Lynch cut also its targets for Ryanair, easyJet and BA, citing prevailing oil prices. Its analysts cut Ryanair's forecasts by 7.3%, adding: ‘Over the long term, we believe Ryanair can create value. However, in the nearer term, share-price volatility may continue reflecting short-term macro-related concerns, market sentiment and fuel-price movements.' The bank retained a ‘buy’ recommendation on Ryanair shares and a ‘neutral’ recommendation on easyJet and BA.
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