Image source: easyJet plc
The easyJet (LSE:EZJ) share price has tumbled by almost 30% over the last 12 months. Yet, despite what this trajectory might suggest, the underlying business is delivering solid results. Bookings for the next three quarters are already ahead compared to a year ago. And management believes the company’s on track to reach a pre-tax profit of £709m – 16.3% projected increase year-on-year.
Does this mean the easyJet share price is massively underappreciated right now? And if so, how high could the stock climb over the next 12 months? Here are the latest analyst forecasts.
easyJet to take off?
As of 4 April, 15 of the 21 analysts following easyJet currently have a Buy or Outperform recommendation. And this strong conviction is also reflected in the 12-month share price targets for this business. The average consensus expects the airline stock to rise to 680p by April 2026, with even the most pessimistic outlook projecting 570p.
Considering the shares are currently (10 April) trading at around 435p, there seems to be ample potential for price rises for any investors who consider jumping in today. If these projections prove to be accurate, investing £5,000 right now could grow to £7,907 by this time next year.
While exciting, that sounds a bit dubious. Don’t forget the stock market typically offers annual returns near the 10% mark, not 60%. So is this a realistic expectation?
The bull case
A quick glance at the valuation certainly implies a large growth potential. The firm’s forward price-to-earnings ratio currently sits at a dirt cheap 5.9. By comparison, the stock’s 10-year average is closer to 12.5.
Seeing such a steep discount usually implies something’s wrong. The latest trading update issued a warning that revenue in the second quarter has started “modestly” softer compared to a year ago. That’s certainly not brilliant. However, digging deeper, the issue appears to stem from management’s investments to expand capacity that are expected to deliver results during the next winter period and beyond. In other words, this looks like nothing more than a speed bump.
Meanwhile, the profit picture’s looking far rosier. The firm’s first quarter usually lands in the red, just like most airlines. However, the losses this time around landed at £61m versus £126m a year ago – a 52% improvement. Pairing all this with more flights flown, higher passenger volumes, and a boosted load factor, easyJet appears to be chugging along very nicely.
What could go wrong?
The company has certainly made a solid start to its 2025 fiscal year ending in September. And while performance in the second quarter might be a bit weaker, this appears to be nothing more than short-term pain for long-term gain. However, easyJet’s still susceptible to fluctuations in oil prices, which impacts the cost of jet fuel.
At the same time, while US tariffs were put on pause last week, a global trade war could still break out three months from now. And any retaliatory tariffs from Europe could impose higher costs on consumers, adversely impacting demand for travel. But with £2.8bn of cash & equivalents on its balance sheet, the company appears relatively well-positioned to weather the storm.
With that in mind, I think investors seeking exposure to the short-haul travel sector may want to take a closer look at easyJet.
