Thursday 27 July 2017

Ryanair shares tipped to soar despite airline sector challenges

 

Ryanair may be flying at an all-time high but analysts believe there is yet more spectacular growth to come from the Irish carrier, new research reveals. Stock photo: PA
Ryanair may be flying at an all-time high but analysts believe there is yet more spectacular growth to come from the Irish carrier, new research reveals. Stock photo: PA

Fearghal O'Connor

Ryanair may be flying at an all-time high but analysts believe there is yet more spectacular growth to come from the Irish carrier, new research reveals.

Brexit, terrorism, the prospect of rising oil prices - not to mention jittery consumer confidence throughout Europe - have sent shivers through airline sector. But, in a note, analysts at Barclays have predicted that the Michael O'Leary-led airline will continue to cruise above any turbulence, with continued strong growth in both share price and profits.

"We continue to view Ryanair as the highest quality airline in our coverage, combining 10pc CAGR [compound annual growth rate] topline growth with industry leading margins and balance sheet, generating sufficient excess cash to buy back at least 5pc of market cap per annum," it said. "Despite recent geopolitical volatility, we see clear upside to Ryanair's summer guidance."

In the note, Barclays has predicted a rise in the price of the airline's shares to €20 - almost 9pc on its current price. It raised its 2018 net profit forecast to €1.57bn, about 10pc above the midpoint of the company's own guidance.

Although Ryanair had kicked off its financial year with "its traditional highly conservative outlook", the Barclays analysts said that they saw "upside to almost every moving part, including average fares, ex-fuel unit costs and ancillary revenues".

"Nonetheless, in the light of geopolitical events over the last 10 days (London attacks, UK election), Ryanair's caution is understandable," said the note. Following a challenging year which has caused most of its Western European LCC peers to reduce expansion plans, Ryanair, along with Wizz Air, continued to pull ahead of the pack "both financially and operationally", it said. "As well as its excellent management team, Ryanair has benefited from continuous improvements to its network, product and digital strategy, none of which show signs of slowing."

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