RBC Capital upgrades EasyJet stock citing strong UK travel demand

RBC Capital upgraded EasyJet Plc. (LSE:EZJ) to Outperform from Sector Perform, raising the price target to £6.50 from £5.70, citing strong UK travel demand and potential benefits from fuel and foreign exchange tailwinds. Analysts also noted that EasyJet's profitability-enhancing measures, including reducing winter losses and expanding its Holidays division, could lead to the airline exceeding FY26 forecasts. The upgrade reflects confidence in EasyJet's strategic initiatives and favorable market conditions.

Analysis

RBC Capital has upgraded EasyJet Plc. (LSE:EZJ) to Outperform from Sector Perform, concurrently raising its price target from £5.70 to £6.50. This revised outlook is underpinned by EasyJet's advantageous positioning to capitalize on strong UK travel demand and anticipated tailwinds from fuel costs and foreign exchange rates. Analysts at RBC Capital project solid performance for fiscal year 2026, citing EasyJet's internal strategic initiatives aimed at enhancing profitability. These measures include a concerted effort to reduce traditional winter losses, an increase in average aircraft size for better operational efficiency, and the expansion of its Holidays division. RBC Capital expresses confidence that these initiatives, coupled with favorable market conditions, could enable EasyJet to surpass current above-consensus expectations for FY26 financial performance. The overall sentiment surrounding this update is strongly positive, reflecting a bullish view on the airline's prospects.

Key Decisions for Investors

• Investors should consider the RBC Capital upgrade and the new £6.50 price target as indicative of potential upside in EasyJet's shares, supported by strong UK travel demand and favorable cost environments.
• Monitor EasyJet's progress in executing its strategic initiatives, particularly the reduction of winter losses, fleet upgauging, and growth in the Holidays division, as these are key drivers for potentially exceeding FY26 earnings forecasts.
• Given the positive analyst sentiment and raised expectations, current shareholders might consider holding or increasing their positions, while prospective investors could view this as a favorable entry point, subject to their own risk assessment and further due diligence.