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Ryanair Stock Undervalued, Says Bernstein in New Report
Summary
Financial services firm Bernstein has reiterated its "outperform" rating for Ryanair, raising its price target and naming the airline its top European transport pick for the third quarter. The firm argues that the market is undervaluing the carrier's long-term earnings potential.
Analysts at Bernstein have reaffirmed their positive outlook on Ryanair, raising the Irish airline's price target to €32.50 from €32.00 and reiterating an "outperform" rating. The firm identified the ultra-low-cost carrier as its top European transport selection for the third quarter, suggesting its current stock price does not fully reflect its future earnings capability.
According to the report, Bernstein believes investors are pricing in overly pessimistic assumptions, creating an attractive entry point. The firm highlighted several factors supporting its position, including easing fuel cost pressures, constrained aircraft capacity across the European airline industry, and Ryanair's persistent cost advantages over competitors.
Bernstein's analysis projects significant growth for the airline, forecasting passenger numbers to approach 250 million by the end of the decade. This growth is expected to drive earnings per share (EPS) above €3, with ongoing share buybacks providing an additional boost to shareholder value. The firm noted Ryanair's net cash balance sheet and disciplined expansion as key strengths that will support margin growth.
AdThe analysts argue that the current share valuation implies a net income of less than €10 per passenger, a figure they consider too low. They cite resilient travel demand and limited aircraft availability in Europe as conditions that position Ryanair to continue capturing market share. While acknowledging risks such as higher fuel prices or a weaker macroeconomic environment, Bernstein maintains that the airline's structural earnings power is currently underestimated by the market.