EasyJet Share Price: Solid Fundamentals Meet Weak Technicals

Summary:
• EasyJet share price has been in a strong bearish trend in the past few months even as the aviation industry recovers.

EasyJet share price has been in a strong bearish trend in the past few months even as the aviation industry recovers. The stock was trading at 316p, which was slightly above this year’s low of 279p. It has crashed by more than 56% from the highest level this year. Other airline stocks like IAG and Wizz Air have all struggled.

Demand bounces back

EasyJet and other aviation companies have had a mixed year this year. Their demand has risen sharply in the past few months as countries removed their Covid restrictions. In its most recent trading update, EasyJet said that its business was doing well. It expects its EBITDAR will be between £665 million and £685 million. 

The company said that it expects its Q4 headline EBIT will be between £525 million and £545 million. This happened as load factor is expected to rise by 92%. For the year, the company expects its headline loss to be between £170 million and £190 million.

EasyJet has seen the number of flights rise. It had 48,585 flights in September and carried over 7.8 million customers during the month. Analysts expect that the company will continue improving as cancellations ease.

Analysts are bullish about EasyJet. For example, those at Deutsche Bank expect that the EasyJet share price will rise to 415p, which is much higher than the current 316p. At the same time, those at JP Morgan, UBS, Goldman Sachs, and Bernstein expect the shares will rise to over 400p. The average estimate for the stock is 606p, which is about 91% above the current level.

EasyJet share price forecast

The daily chart shows that the EZJ stock price has been in a strong bearish trend in the past few months. The stock has crashed below all moving averages while the Relative Strength Index (RSI) has moved to the neutral level. It has also formed a break and retest pattern by moving to the key resistance level at 338p. 

The outlook for the EasyJet share price is bearish because of the break and retest pattern. Therefore, the stock will likely retest the key support level at 279p. A move above the resistance at 345p will invalidate the bearish view.