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Oct 8 2018, 06:30 IST/BST
Following last week’s profit warning and marking to market for fuel, we reduce our net income forecasts for Ryanair by 13% and 15% for FY2019 and FY2020 to €1133m and €1219m, leaving the stock on a P/E of 12x and 11.2x respectively. However, ROCE has averaged >20% over a 20-year period and we expect this to continue. Factoring in forward earnings and underpinned by asset values, we reduce our price target to €14 (from €18) but retain our ‘Outperform’ rating. With the conclusion of the €750m buyback programme, over €6bn has been returned to shareholders since 2008; we expect more of the same with €4.3bn of free cash flow over the next four years (almost one-third of the market cap).