viewRyanair Holdings plc

Ryanair hailed by CS as an enduring growth story


Low-cost airline Ryanair (LON:RYA) has been identified by Credit Suisse as one of the best organic growth stories among its European industrials universe.

In a note entitled “In search of quality growth” the airline just fails to make the top 10, placing 11th out of 120 industrial stocks on its ranking system.

Credit Suisse number cruncher Neil Glynn explains that the note focuses on track records for top quartile organic revenue growth and low-volatility returns, and highlights the following key points:

1: The 11th placed ranking illustrates the strength of the business model in a high fuel price/soft demand environment;

2: Ryanair (RYA) has consistently ranked in the top 15 for the past five years;

3: While it ranks above average on quality growth, its price/earnings ratio is low relative to the majority of the universe.

“We find RYA’s ranking relative to the group compelling and think continued improvement in the return profiles of RYA and EZJ [easyJet] should broaden investor appetite,” Glynn said.

The broker has reiterated its ‘outperform’ rating and target price of €7.70, which suggests upside potential of around 29%.

Meanwhile, Oriel Securities has been taking a look at airport regulation in the UK and so far as Ryanair’s hub at Stansted is concerned, notes that a price monitoring regime will be introduced where the Civil Aviation Authority (CAA) has powers to intervene if prices exceed a certain threshold.

“The CAA’s research reveals charges are already at or above the competitive benchmark and it would expect to intervene if charges increase by more than half the rate of RPI [the retail price index].

“This should open the way for Ryanair to agree a growth deal with the new owner, Manchester Airports Group, in our view,” Oriel said.

Quick facts: Ryanair Holdings plc

Price: 9.13 EUR

Market: LSE
Market Cap: €9.95 billion

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