Is Ryanair’s share price likely to fall further?
The recent warning from Ryanair has put pressure on the share price, though it has taken the valuation back to its five-year average.
Ryanair share price struggles after recent bad news
While it has managed to rally off its lows, the Ryanair share price was hit hard by news that second quarter (Q2) profits had nearly halved. As a result, Ryanair expects to cut fares in a bid to stimulate demand, something that will hurt profit margins.
Ryanair’s strong margins will provide some insulation from any further summer turmoil, but should bookings remain weak investors should prepare for further cuts in prices.
Ryanair valuation and broker ratings
Ryanair’s recent fall has taken the valuation back to the five-year average around 10 times earnings. Much of the bad news may now be in the price, though investors will be wary around a possible decline in bookings over the key summer period.
Of the 21 brokers covering the stock, fourteen still have ‘buy’ or ‘strong buy’ ratings, though this is down from 17 in mid-July. Seven analysts have ‘hold’ ratings, an increase from 4 a month ago.
Price targets have similarly shifted over the last month. In mid-July the median target price was €24.00, and this has now come down to €19.00. This still represents upside of 29% however to the current price (as of 15 August).
Ryanair share price – technical analysis
Ryanair has taken a tremendous knock since its high in April at nearly €22.00. The decline was firmly in place before the profit warning, but the news gave the price a shove to the €14.00 level.
However, it has managed to hold it for the time being, and a close back above the early July support level at €16.00 might help to bolster the view in the short-term. A close back below €13.50 brings the December 2022 low at €12.20 back into view.
RYA chart
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