Ryanair shares close to new highs: but is travel uncertainty an issue?

• Ryanair share price approaching three-year high
• Analysts forecast a €20.00 share price
• Can a positive report outweigh travel uncertainty?
• Want to trade Ryanair shares? Open an account today

Ryanair (RYA) shares opened at €15.51 on 13 April, and climbed to €15.88 within an hour. The bullish trend marks a continued uptick in value since the Ryanair share price hit a five-year low of €8.52 in April 2020. Although the outlook for airlines remains unclear, shares in Ryanair are now approaching a three-year high.

What’s fuelling Ryanair’s bull run?

Covid-19 vaccinations and falling death figures are helping the bullish sentiment. Despite recent flight cancellations by other low-cost airlines, Ryanair has introduced a 'no change fee'. The scheme will run until October 2021 and allow customers to amend any flights affected by Covid-19 restrictions. The system permits up to two free changes, something Ryanair’s commercial director Jason McGuinness believes will get the airline and customers through any short-term uncertainty.

British transport secretary Grant Shapps also delivered a more optimistic message on summer travel. Although cautious, he told the BBC on 9 April, ‘for the first time’ in months, he’s ‘not advising against booking foreign holidays’.

International travel will resume on 17 May, but a traffic light system will be in place. It’s not yet clear how this will impact travel, but Shapps’ assertion that there is ‘light at the end of the tunnel’ is more positive than recent advice urging people ‘not to book’ until the ‘picture is clearer’.

What is the Ryanair share price forecast?

Berenberg recently upgraded Ryanair shares from 'hold' to 'buy' on 30 March, inspired by a 'whipped around' positive outlook on 2021/2022 travel. Current Ryanair share price forecasts range from €18.25 as a medium value, to a high of €20.00. Both forecasts would see Ryanair shares hit their highest ever valuation.

Aside from easing restrictions, the airline’s recent guidance has contributed to the bullish sentiment among analysts. The year-end guidance to 31 March 2021 (FY21) showed a revised net loss figure. Due to improved conditions, Ryanair expects its upcoming loss to be 5%-10% lower than previously expected (€800 million - €850 million compared to €850 million - €950 million).

Credit rating agency Fitch has also given Ryanair a BBB rating, and has stated that its recovery could be quicker than the industry itself, due to its market position and short-haul routes. The airline’s liquidity is also strong, and Ryanair executives noted that the company has cash reserves of €3.21 billion at present. Although the report stopped short of offering any profit guidance, the tone was more positive than expected.

Could this be enough to keep Ryanair shares bullish until Covid restrictions are fully lifted, or will uncertainty continue to hamper the recent recovery?

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