easyJet: Updating model post Q3; reducing estimates on higher fuel

Research evidence excerpt

easyJet: Updating model post Q3; reducing estimates on higher fuel

Harry J Gowers AC Europe Equity Research

(44-20) 7134-7522 23 July 2026 C A Z E N O V E

harry.gowers@jpmorgan.com

Investment Thesis, Valuation and Risks

easyJet (Underweight; Price Target: 360p)

Investment Thesis

• We see risks of pricing pressure from high capacity growth. easyJet is growing +7%

in Sep-26E into a competitive UK leisure market, which has seen elevated capacity

growth from peers. This is combined with bookings uncertainty around the Middle East.

This includes a high amount of new route/base expansion which could take longer to

mature. In our view, pricing may not be robust enough to offset higher costs.

• Ex-fuel CASK inflation elevated. Despite capacity growth, we model ex-fuel CASK

up +5% in Sep-26E, driven by inflationary pressures across most cost lines and little

upgauging benefit coming through yet.

• Airline margins could weaken further. Winter losses are worse in Sep-26E versus the

prior year, and Airline margins have weakened given pricing/cost dynamics. Stronger

Holidays growth may not be able to offset weaker Airline margins at the group level.

• Large increase in capex coming. Capex is forecast to increase to £3.3bn by Sep-28E,

putting pressure on returns and the ability to return excess cash to shareholders.

Valuation

We think easyJet should trade on a 30% discount to its average multiples since 2010 (ex the

pandemic) due to lower growth and earnings risk. Our Dec-27 PT of 360p is thus based on

the average of the following target multiples applied to our calendarised 2028 forecasts (5x

EV/EBITDA; 11x EV/EBIT; 8x P/E).

Risks to Rating and Price Target

EZJ-specific risks: (1) Pricing growth is stronger than we expect on lower competitive

pressures or improving UK backdrop.