On Tuesday, BofA Securities adjusted its price target on Ryanair (NASDAQ:RYAAY), listed on NASDAQ:RYAAY shares, lowering it to $170 from the previous $176. The firm continues to recommend a Buy rating for the airline's stock.
Ryanair recently acknowledged expectations of weaker summer pricing, as shared in their earnings call. The company's management could not pinpoint the exact cause of this anticipated softness but confirmed that customer demand remains strong. For the fiscal year 2025, Ryanair projects a modest increase in unit costs, which surpasses both BofA Securities' and the consensus forecasts.
In response to the updated guidance from Ryanair, BofA Securities has revised its net income estimate for fiscal year 2025 downward by 13%, now expecting €2.2 billion. This revision reflects anticipated higher costs. However, the firm's fare estimates for the same period remain largely unchanged.
The price objective for Ryanair's shares in the European market has also been reduced by 10% to €25 from €28. The adjustment in the American Depositary Receipts (ADR) price objective represents a 4% decline to $170 from $176, incorporating an increased premium of 23%, up from the prior 15%.
Despite the lowered price target, BofA Securities points out that Ryanair's shares are currently trading at a multiple of 9.5 times the estimated earnings for fiscal year 2025.
This is notably below the airline's historical average of 13 times earnings. BofA Securities justifies the Buy rating by citing Ryanair's market share gains and a projected earnings growth of 9%.
InvestingPro Insights
As we delve into the financials of Ryanair (NASDAQ:RYAAY), InvestingPro data highlights a robust market capitalization of $22.39 billion, indicating the company's significant presence in the market. The airline's P/E ratio stands at an attractive 10.95, suggesting that the stock may be undervalued relative to its earnings. This aligns with BofA Securities' observation that Ryanair is trading below its historical average earnings multiple. With a PEG ratio of just 0.21, the data points to potential for future earnings growth that may not be fully reflected in the current stock price.
InvestingPro Tips for Ryanair underscore the company's strong financial position, with more cash than debt on its balance sheet, which can be a reassuring sign for investors concerned about financial stability. Additionally, the company's high shareholder yield is a testament to its ability to return value to its investors. For those considering diving deeper into Ryanair's financials, there are 10 additional InvestingPro Tips available, offering insights that could further inform investment decisions. Interested readers can explore these tips and take advantage of a special offer using coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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