Ryanair’s share price is being tipped to surge by nearly 30% in the next 12 months on the back of continued profit and record passenger increases offsetting a drop in fares.
The airline yesterday reiterated its forecast for full-year profits, up to the end of March, to come in at the upper end of the already guided range of €1.17bn-€1.22bn and upped its passenger expectations from 105m to 106m.
This outlook accompanied a strong set of third quarter figures, which showed that — despite a period of disrupted demand arising from November’s terrorist attacks in Paris and Brussels — revenue grew by 17% to €1.33bn and passengers grew by 20% to 24.9m.
The three months to the end of December also saw Ryanair post a 110% annualised jump in post-tax profit from €49m to €103m, while basic earnings per share soared 119% to 7.73c.
Passenger numbers for Ryanair’s fourth quarter (the three months to the end of March) are now expected to rise by 26%, on a year-on-year basis, up from original guidance of 22%.
The airline is set to save around €430m from hedging on fuel costs in the year to the end of March 2017 and could save a further €300m with 50% of its fuel bill hedged into the following financial year.
The company’s share price started yesterday at €13.69, but jumped by almost 6% to close at €14.50.
“We raise our February 2017 target price to €17.50 [a 27.5% jump from yesterday’s opening] as the share buyback, strength in traffic growth guided for the fourth quarter and forward booking momentum allows us to adjust up our 2017 earnings slightly,” Darren McKinley of Merrion Stockbrokers said in a research note.
Ryanair also announced its latest shareholder return plan with an aggregate €800m share buyback programme to commence on Friday.
The company has returned €3.3bn to shareholders, via special dividend payments and share buybacks in the last eight years and returned the €398m it received from IAG for its near 30% stake in Aer Lingus in November.
Forward bookings for this month and next are up by 4%, gaining momentum from the 3% growth seen in December.
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