EasyJet Share Price Recovery Avoids Turbulence for Now

Summary:
• EasyJet share price has rallied in the past six straight days as UK and airline stocks rebound. The shares spiked to a high of 400p

EasyJet share price has rallied in the past six straight days as UK and airline stocks rebound. The shares spiked to a high of 400p, which was the highest level since August 19 of this year. This means that they have recovered by over 45% from the lowest level this year. Other airline stocks like Ryanair and IAG have also recovered.

Booming business

EasyJet is a leading aviation company with major operations in Western Europe. The company has hundreds of relatively new aircraft, which it uses to serve millions of customers per month. In its most recent trading update, the company said that its EBIT will be between £665 million and £685 million. The company had a similar performance in the same period before the pandemic hit. 

EasyJet’s business has recovered well. In the last quarter, it flew 26.3 million seats while its operating capacity rose to 88%. Load factors rose to 92%. It expects that its loss for the year will be between £170 million and £190 million. Most importantly, the company’s energy costs are hedged, with the 69% hedged for H1’23 at $802 per metric ton.

EasyJet share price rallied this week after the strong Ryanair earnings boosted market sentiment. It has also rallied because of the ongoing rumors that IAG was preparing making a bid for the company. These rumors are yet to be confirmed but analysts believe that the industry is ripe for consolidation. 

As you recall, the company turned away a bid by rival Wizz Air in 2021. Since then, the stock has crashed by more than 50%, making it relatively undervalued.

EasyJet share price forecast

The daily chart shows that the EasyJet share price has staged a strong recovery in the past few days. It has managed to move from a low of 280p to 400p. As it rose, the shares moved above the important resistance level at 338p, which was the lowest level on July 5. It has also moved above the 25-day and 50-day moving averages.

The stochastic oscillator has moved above the overbought level while the stock has moved above the ichimoku cloud indicator. Therefore, the EasyJet stock price will likely continue rising as buyers target the next key resistance level at 450p.