Ryanair H1 preview: Where next for the Ryanair share price?

Ryanair shares have recovered all of their pandemic-induced losses and has significantly outperformed its rivals listed in London. We explain what to expect from the earnings and consider how Ryanair shares could react.

Charts (2)

When will Ryanair release H1 earnings?

Ryanair is scheduled to release interim results covering the six months to the end of September on Monday November 2.

 

Ryanair H1 earnings preview: what to expect from the results

Ryanair is expected to continue down the long road to recovery when it reports interim results. The airline pounced on opportunities that presented themselves at the height of the pandemic, having ordered new aircraft and renegotiated with unions, airports and suppliers to bring down costs, helping strengthen its position as travel recovers over the coming years.

Traffic has rebounded firmly in the current financial year, with Ryanair carrying more than twice as many passengers in the first half than it did last year. Below is a chart outlining the steady improvement in traffic since the start of the financial year in April:

Ryanair Traffic (millions)

2020

2021

April

0.04

1

May

0.07

1.8

June

0.4

5.3

Q1 total

0.51

8.1

July

4.4

9.3

August

7

11.1

September

5.2

10.6

Q2 total

16.6

31

H1 total

17.1

39.1

(Source: Ryanair)

 

Still, traffic remains less than half of pre-pandemic levels, with Ryanair having carried 85.7 million passengers in the six months to the end of September 2019.

Ryanair has warned there is close to zero visibility for the remainder of the financial year despite the significant improvement seen in recent months. However, it has grown more bullish on its prospects over the medium-term. Ryanair said in September that it expects traffic to grow 50% over the next five years, up from its previous goal of 33%. As a result, Ryanair expects to carry over 225 million passengers annually by March 2026, which is up from its previous goal of 200 million and a marked increase from the 149 million passengers carried in the 2019 financial year before the pandemic hit.

However, profitability is expected to recover at a much slower rate than traffic. Ryanair has cut prices to attract customers in an increasingly competitive market and load factors remain well below pre-pandemic levels, meaning it is not running as efficiently as normal as it prioritises gaining market share over its bottom-line. Plus, it is being squeezed from the other end amid rising costs from everything from fuel to taxes. Still, Ryanair’s low-cost model may shine in the current environment versus its more premium peers.

Analysts are expecting Ryanair’s total operating revenue to rise to €1.89 billion in the second quarter from €1.05 billion the year before and for the airline to turn to a €215.4 million pretax profit from the €222.4 million loss booked last year. They are anticipating EPS of €0.18 compared to a €0.21 loss the year before.

If Ryanair meets those quarterly expectations, it will be on course to report revenue of €2.26 billion in the first half and a pretax loss of €109.1 million with a loss per share of €0.06. That would compare to revenue of €1.17 billion and a loss of EUR192.1 million, or €0.37 per share, last year.

The biggest threat to Ryanair and the wider airline industry remains the possibility that European countries will reintroduce lockdown measures or travel restrictions if coronavirus cases resurge during the winter or new variants emerge, which could severely scupper the slow and steady progress made this year. Ryanair looks financially healthy with over EUR4.0 billion in cash at the end of June, which should be enough for it to weather any uncertainty over the coming quarters while also capitalising on any new opportunities that present themselves.

Ryanair shares have outperformed their peers over the past 18 months and is one of only two London-listed airlines to see its shares recover their pandemic-induced losses, with the stock currently trading over 6% above pre-pandemic levels. The only other airline to achieve that is Wizz Air, which is trading over 4% higher than in February 2020.

Meanwhile, easyJet trades 51% below pre-pandemic levels, TUI is down 34%, Jet2 is down 35%, easyJet is worth less than half what it was before the coronavirus crisis, and British Airways-owner IAG is the worst performer, down 62%.

The 22 brokers that cover Ryanair remain bullish on the stock and have an average Buy rating and a target price of €18.32, implying there is over 12% potential upside from the current share price.

 

Where next for the Ryanair share price?

The Ryanair share price has traded range bound across most of 2021. The price has been limited on the downside by €15.00 and on the upside by €17.60, any moves outside of this range have been brief. 

The price currently trades bang in the middle of the trading range, on both the 50 & 100 sma which are flat. The RSI is also neutral around the 50 level. 

Traders might look for as breakout trade here. Buyers could look for a move above €17.60 for further upside towards €18.00 round number and €19.60 the 2017 high. 

Sellers could look for a move below €15.00 to open the door to €1.14.70 and €13.75 the year to date low. 

Where next for the Ryanair share price?

 

How to trade Ryanair shares

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  3. Choose your position and size, and your stop and limit levels
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