EasyJet Share Price Forecast as Demand Rebounds

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Written By: Crispus Nyaga

Oct 12, 2021, 09:29 BST 09:29

Summary:

EasyJet share price declined by more than 2.6% even after a positive report by the company. The stock crashed by more than 2.72% on Tuesday

The EasyJet share price declined by more than 2.6% even after a positive report by the company. The stock crashed by more than 2.72% on Tuesday and is trading at 630p, which is about 12% below the highest level last week.

EZJ boosts capacity

EasyJet, the medium-sized budget airline said that it will boost its capacity to about 70% of pre-Covid levels after seeing strong demand in the past few weeks. This demand has been helped by the robust vaccination drive in the UK and other countries in Europe.

In another positive report, the company said that its financial position has improved modestly in the past few weeks. The firm said that its losses declined by half over the summer period compared to the same period a year ago. It has also turned cash-flow positive as its bookings have jumped. In a statement, the company’s CEO said:

“We have seen city breaks beginning to return alongside growing demand for leisure travel from customers looking for flights and holidays to popular winter sun destinations.”

The EasyJet share price has been under intense pressure after the company announced that it had rejected a bid by Wizz Air. It said that the offer significantly undervalued its business. The company then went ahead and announced a billion-pound capital raising deal.

The next key catalyst for the stock will be the upcoming airline earnings season. It will start today when Delta Airlines will release its earnings. Other companies like United, American, and Southwest will publish their results next week.

The daily chart shows that the EasyJet share price has been in a bearish trend in the past few weeks. It has already declined by more than 30% from its highest level in May.

Along the way, the stock has formed a descending channel that is shown in green. The stock is slightly below the 25-day and 50-day moving averages.

Therefore, for now, the shares will likely keep falling as bears target the lower side of the channel at 545p. In the longer term, however, the stock will likely break out higher since a descending channel is often a bullish sign.

Written By: Crispus Nyaga

Crispus Nyaga is an analyst and consultant with more than 8 years of experience. He started trading Forex while completing his BSc degree and he has worked for brokers like OctaFX, easyMarkets, & Capital. He has also contributed widely in leading websites like rkdream.com, SeekingAlpha, iNvezz, DailyForex, and BanklessTimes. In 2017, Crispus completed his MBA.