EasyJet Plc: Risk Reward Update

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EasyJet Plc: Risk Reward Update

UpdateM

RiskRisk RewardReward– EasyJet- PlcEasyJet(EZJ.L) Plc (EZJ.L)

Strong Strategic Assets, But Near-Term Headwinds Limit Upside

PRICE TARGET 280p UNDERWEIGHT THESIS

We value easyJet on a blended FY27 forward EV/EBIT, EV/EBITDA and P/E multiple of

~5x/~2x/~7x our base case estimate, at the bottom end of the 10Y range, reflecting lower ▪Valuation remains cheap, with the shares

volumes and increased pricing pressure. We expect EBIT margin of 3.4% in FY27. trading below history on almost all metrics.

However, we expect the company to be 456p

exposed to near-term competitive and cost

Consensus Price Target Distribution 280p 635.00p pressure impacting yields and profitability.

MS PT

benefits only appear when upgaugingSource: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates ▪Cost

of fleet materialises in FY26 and beyond,

leaving risk skewed to the downside

especially with capex gradually stepping up

RISK REWARD CHART and low profitability levels near-term

preventing the distribution of more

attractive total cash returns relative to

GBp peers.

▪In contrast, the rollout of the company's

600 Holidays business (~35% of PBT) should

partly offset the above risks in our view.

440p440p(+26.76%)440p(+26.76%)(+26.76%)

450 Consensus Rating Distribution

347p347p347p 42% Overweight

300 280p280p(-19.33%)280p(-19.33%)(-19.33%) 42% Equal-weight

16% Underweight

150 MS Rating

Source: Refinitiv, Morgan Stanley Research

130p130p(-62.55%)130p(-62.55%)(-62.55%)

MAY '25 NOV '25 MAY '26 MAY '27 Risk Reward Themes

Key: Historical Stock Performance Current Stock Price Price Target Pricing Power: Negative

Source: Refinitiv, Morgan Stanley Research View descriptions of Risk Rewards Themes here

BULL CASE 440p BASE CASE 280p BEAR CASE 130p