Easyjet has had its price target cut by Deutsche Bank, which sees higher fuel costs eating into the benefits of greater passenger numbers and fuller planes.

The Luton-based carrier has hedged its fuel until 2023, which means benefits from more passengers than expected in 2002, up 8% upgrade, and the load factor increasing by 4 percentage points.

This, though, unwinds in 2023, hence the downgrade to 720p from 750p.

But with the shares trading well shy of this at 616p, there is enough upside for the shares to remain a buy said the broker.

Liberum is also a buyer, though it too is cautious about fuel costs across the sector.

The broker says emphasis has to be on quality with higher fuel costs putting weaker cost bases and balance sheets under extra pressure.

“We expect the forthcoming September quarter results season to show a disappointing summer. While not as bad as 2020, travel activity remained hampered by ongoing travel restrictions.”

“Nonetheless, we see the industry as firmly on the recovery path, albeit with risks through the winter if some countries temporarily reverse the relaxation of restrictions.”

The broker’s preferred stocks are British Airways owner IAG (215p target) and easyJet (680p).

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