​​easyJet's decline continues despite sunnier outlook

​​​easyJet’s shares tumble despite positive outlook

​easyJet’s numbers prompted a sharp fall in the share price, with investors unenthused by news of the return to dividend payments.

​However, one highlight is that easyJet experienced its best summer ever, with its holiday division performing exceptionally well. It expects pre-tax profit of £440m-£460m for the year. If achieved, this will mark easyJet's first annual profit since 2019.

​easyJet has made a promise to restore the dividend and intends to distribute 10% of its post-tax earnings to shareholders this year, though the yield will remain low around 1%.

​Looking ahead, the outlook for easyJet appears more encouraging. The company has started FY24 on a positive note, with ticket yields up and load factors remaining stable. Additionally, easyJet has increased its capacity by 15% to meet anticipated demand. To further enhance fuel efficiency and reduce costs, the airline plans to acquire an additional 157 aircraft.

​Despite these positive developments, the market reaction to easyJet's results was severe. Analysts had predicted pre-tax earnings of £469m but the group came in £9 million below forecasts. Recession fears have not gone away, and investors remain concerned that an economic downturn will render the optimistic forecasts for the coming year moot.

​Analyst ratings for easyJet

Refinitiv data shows a consensus analyst rating of between ‘buy’ and ‘hold’ for easyJet – 2 strong buy, 9 buy, 7 hold, 1 sell and 1 strong sell - with the median of estimates suggesting a long-term price target of 600 pence for the share, roughly 51% higher than the current price (as of 17 October 2023).

​Technical outlook on the easyJet share price

​easyJet’s share price continues to tumble and this week dropped to 381.8 pence, a level last traded in January of this year, having previously been rejected by the 2020-to-2023 long-term downtrend line in July, September and October of this year.

​easyJet Weekly Candlestick Chart

​This downtrend line, together with the 55-week simple moving average (SMA) and the early-October high at 439.8p to 450.7p will need to be overcome for the long-term downtrend to be questioned.

​At present the easyJet share price seems to have found at least interim support around the October and November 2022 lows at 386.5p to 385.4p.

​A fall through this week’s 381.8p low would engage the May 2020 low at 375.2p and perhaps even the March 2020 pandemic low at 345.2p, though.

​easyJet Daily Candlestick Chart

​Good resistance can now be found between the August-to-early October lows at 405.1p to 413.0p.

​Only a currently unexpected bullish reversal which would take the easyJet share price back above its long-term downtrend line and its early-October high at 450.7p could stem the current selling pressure. Such a bullish reversal doesn’t look at all likely for the near future, though.