Where could easyJet’s share price go in the next 12 months? Here’s what the experts say

The last few months have been a very difficult time EasyJet (LSE:EZJ) shareholders. Since August, the short-haul airline’s stock has enjoyed a 25% increase in its market capitalization. And it’s not hard to see why. This latest summer season delivered record results with a 16% jump in pre-tax profit in the three months to June.

In particular, easyJet Holidays was stealing the show, with 33% passenger growth paving the way for a 49% jump in pre-tax profits to £73m. This part of the business has now grown to around 31% of easyJet’s value – an encouraging sign given that it is accompanied by high margins.

Pairing these excellent figures with a seemingly strong, cash-rich balance sheet suggests easyJet’s price is set to continue flying.

However, as other airlines release their results, a concerning trend is emerging. Ticket prices are falling, likely due to reduced demand for travel or increased competition as more airlines return to the route. Either way, it sets the tone for easyJet’s current direction. So can the stock maintain its momentum? Here’s what the experts say.

easyJet price forecast

The threat of falling airfares is undoubtedly frustrating. However, easyJet analyst forecasts remain firm as this external storm begins to blow. As mentioned earlier, the group’s holiday division is growing rapidly and provides an alternative for management to offset any price drop.

At the same time, analyst forecasts surrounding oil prices suggest a downward trend. The Economy Forecast Agency has predicted that the price per barrel will drop to $62.92 in November next year. Compared to current prices, that’s about a 15.2% drop over the next 12 months. In other words, jet fuel looks set to become significantly cheaper by 2025, helping offset the margin impact of lower ticket prices.

With that in mind, the optimistic view on easyJet’s share price starts to make more sense. Of the 20 institutional analysts following the business, three rate the stock a Buy, 12 Outperform, and five remain on the call with a hold recommendation.

Is this a buying opportunity?

Given the bullish outlook of analysts and the share price forecasts that look encouraging, easyJet seems to be a screaming buy right now. However, that may not necessarily be the case. It is important to always take predictions with a grain of salt. They rely on a lot of guesswork which leads to questionable accuracy.

If the geopolitical conflict in the Middle East continues, oil prices may end up going up instead of down. And with it, the cost of jet fuel could rise, sending easyJet’s profits firmly in the wrong direction.

Without tighter restrictions, the situation will put pressure on newly restored profits, which, even if maintained, may take a long time to return to pre-pandemic levels.

On the inside, easyJet looks like a good airline business. But there is no denying that the company faces many external threats that management has no control over. And investors should consider whether this is a risk worth taking compared to other opportunities.