Ryanair on course for €8.40 share price by year-end, say stockbrokers

RYANAIR has been given an end-of-year price target of €8.40 by Davy Stockbrokers in advance of the publication of the airline’s third quarter results in 12 day’s time (shares closed down 1.64% at €7.18 yesterday).

In an equity flash note in advance of Ryanair’s results, Davy Stockbrokers analyst Stephen Furlong said that, with just two months to go in the company’s accounts for 2004, he expects the company to confirm full-year guidance of net income (post-exceptionals) of €260m and net income (pre-goodwill, exceptionals) of €270m.

Davy expect Ryanair’s pretax profits for year end March, 2004, to hit €288.9m (2003 €264.6m) and passenger numbers to be 23.4 million with capacity growth slowing from May onwards to 20%.

“Slowing capacity growth, continuing cost reductions, favourable currency movements (30% of costs are in dollars), strong ancillary growth and the better macro environment all point to a strong earnings performance in FY 2005. In addition, the regulatory risk should be removed with a deadline of June 30 for the European Commission’s decision on Charleroi,” added Mr Furlong.

The Davy analyst is also expecting some news on the 10 Boeing jets which are due for delivery in Spring of this year which will be operated under long-term leases.

The flash note from Davys, who are brokers to Ryanair, also revealed that Ryanair is talking to 71 new airports at present with a view to opening up new hubs and routes to add to its current tally of 146 routes and 11 bases. “Ryanair’s goal is for its fleet to be 65% owned and 35% leased by 2008. In addition to providing significant flexibility, this will significantly boost Ryanair’s free cash-flow position and increase its balance sheets net cash position,” he added.

Yesterday, Goodbody Stockbroker’s analyst Joe Gill said the value of slots at congested Heathrow continues to rise. Mr Gill notes that Qantas and Virgin have apparently paid £20m for two pairs of dailies, while Virgin has paid the same for four pairs.

“This again highlights the underlying value of those slots picked up by Ryanair at Stansted when it acquired Buzz and its 21 routes last April (for €46.6m),” he said.

Mr Gill said that Ryanair now controls over 70% of early morning and late evening movements at Stansted.