EasyJet’s shares dropped after a broker advised that they may need to lower fares this winter to bring in more passengers.
The budget carrier’s stock dropped 1.5 per cent, or 9.2p, to 588.8p after analysts at Paris-based Kepler Cheuvreux said there was a risk Easyjet would need to ‘incentivise demand with fare discounts’ as increasing numbers of Covid-19 infections in some countries made passengers more hesitant to jet off for a winter break.
This was a particular concern given what analysts said was a ‘fragile’ environment for passenger bookings despite ‘encouraging’ numbers for the Christmas holidays so far.
Nosedive – Easyjet shares fell 1.5% on the news that Paris-based Kepler Cheuvreux, analysts said Easyjet was at risk of ‘incentivizing demand through fare discount’
A partial lockdown in the Netherlands on Saturday as well as ‘intensifying’ discussions over fresh restrictions in Germany were both noted as potential risks to passenger traffic heading into the festive period.
Even if lockdowns were not to be implemented, Kepler said, there was a danger that ‘the increasing number of infections and the ongoing discussions in the press about Covid risks will lead some people to be more cautious about making travel plans until the end of the year’.
Eagle Eye – Stock Watch
Eagle Eye Solutions, an marketing technology company, saw a rise in sales after it announced a partnership agreement with Asda for developing a loyalty program for the supermarket chain.
Asda Rewards allows customers to accumulate cash rewards when they purchase certain products.
The scheme is powered by Eagle Eye’s AIR platform and also includes a phone app for customers to access their rewards.
The scheme was tested with Asda workers and has now been implemented in 16 West Yorkshire stores.
Eagle Eye’s shares jumped 5.1 per cent, or 27.5p, to 570p.
The broker also flagged ‘increasing political opposition to low-cost carriers in many of Easyjet’s main markets post-Covid’, particularly after governments shelled out millions in support for national carriers during the pandemic.
These governments will be looking to ‘ensure that the national airlines are able to pay back the funds they have received from taxpayers’. The broker downgraded its rating on Easyjet to ‘reduce’ from ‘hold’ and cut its target price on the stock to 460p from 605p. The FTSE 100 rose 0.05 percent or 3.95 points to 7351.86. While the FTSE 250 rose 0.27 percent or 64.06 to 23621.58.
Many miners contributed to the decline in blue-chip index due to concerns that a slowdown on China’s property market might impact demand for steel and other metals in construction.
Russia-focused steel company Evraz fell 2.7%, or 16.8p to 603.2p. Glencore lost 1.6%, or 5.8p to 362.15p. Antofagasta dropped 1.9 percentage points, or 28ps, to 1460p. BHP lost 1.9per cent (or 37.4p), at 1923.4p.
After its merger with Norton Life Lock, a rival antivirus software company, Avast saw its share of the market surge by 7.1%, or 39.4p to 598.2p.
Mid-cap engineer IMI snapped up US-based Adaptas Solutions, a maker of lab equipment, for £202million ($271million). The deal is expected to immediately boost IMI’s earnings. The shares gained just 0.1%, or 1p to 1793p yesterday, despite the deal.
Wizz Air has signed an agreement for up to 196 Airbus A321 planes as part of their expansion plans. In its expansion plans, Wizz Air ordered 102 planes, with the majority of them being delivered in 2025 and 2027. However, it has the right to order another 94 aircraft that will be delivered in 2028 or 2029. Shares fell 0.2% or 10p to 4765p.
Workplace software firm Kainos posted a 3 per cent year-on-year rise in pre-tax profits to £24.8million in the six months to the end of September as revenues boomed 33 per cent to £142.3million, helped by high demand from the healthcare sector during the pandemic.
The shares fell 9.3 percent, or 191p., to 1861p. This was because investors believed the profit increase didn’t reflect the double-digit growth in revenues.
Bargain retailer B&M slipped 2.4 per cent, or 14.4p, to 585p after the stock was hit by downgrades from both Goldman Sachs and RBC.
Goldman knocked its rating down to ‘sell’ from ‘neutral’ and cut its target price to 580p from 620p, predicting flat earnings for the next three years due to supply chain disruption and higher costs.
RBC lowered its rating to ‘underperform’ from ‘sector perform’ and trimmed its target to 575p from 600p.