Brokers tip Ryanair to continue to fly high

Stockbrokers have responded positively to Ryanair’s first half results, which saw the Irish airline’s pre-tax profits soar by 37 per cent to more than €1 billion.

The stock fell by 4.4 per cent in early trading, likely due to profit taking, but recovered somewhat to come back to €13.38 by 9.30am , down by 1 per cent. And brokers are still confident about its prospects.

Goodbody says it is still a buyer of the stock, with its current target price of €17.60 now “under review”, noting that Ryanair’s results are the pick of the bunch in the current earnings season.

“We think the updated long-term passenger forecasts will lead to revised sell-side forecasts to the upside, especially for FY18,” the broker said.

Panmure Gordon, which has the stock rated as a buy at a target price of €16.50, said the airline’s long-term prospects remain “highly attractive”, and its balance sheet is very strong with some €976m net cash.

Jefferies also has the stock as a “buy” and a target price of €15.50, but noted that profit taking today is likely given the lack of upgrades.

Stephen Furlong, analyst with Davy Stockbrokers, said it was an "exceptional performance" from Ryanair, and has tipped the stock to outperform.

“The combination of lower aircraft and fuel costs will see Ryanair’s relentless market share expansion continue,” he wrote, noting that Ryanair is now the fastest growing airline in the world this winter by seat expansion.

In other airline news, HSBC downgraded the shares of both Easyjet and Aer Lingus owner IAG. The bank said investor expectations for IAG are too high, while EasyJet faces revenue pressure.