The bank said that following a 60% rise in the shares since August, when the Irish carrier’s stock hit a four-year low, the firm was now trading in line with their target price, which was raised to €13.50 from €12.50.
“We think the shares now more appropriately price in scope for earnings growth next year”, said Deutsche’s analysts, adding that they saw “limited scope” for more earnings upgrades in the near-term.
Deutsche also said more clarity on the airline’s 2020 summer season held the key of which direction the numbers were likely to travel.
The bank said the likelihood of fewer Boeing 737 MAX aircraft due to delivery delays could result in “more costly growth, but this could be more than offset by upside on fares per passenger”.
In its results on Monday, Ryanair pencilled in a delivery date for 20 737 MAX planes in “March/April 2020 at the earliest”, less than the 58 aircraft originally expected, as Boeing continued to evaluate the safety of the model, which was involved in two fatal crashes earlier this year.
The company has also warned that “the risk of further delay is rising”, potentially pushing the delivery even further back into the crucial summer period.
New aircraft are crucial for Ryanair’s profitability as it hopes to cut future costs by using more fuel-efficient aircraft, a fact that was brought into stark relief by a 22% rise in fuel costs during the first half to €1.59bn.
This was accompanied, however, by a €1.15bn after-tax profit for the six months to 30 September, which while being the same as the year before included a second quarter that was stronger than analysts had expected with average fares not as bad as feared.
Flight fares did fall 5% in the first half but are expected to be “slightly better” in the second, although there remains some uncertainty in the market, especially around Brexit.
Deutsche’s assessment on Tuesday was replicated, albeit more positively, by HSBC, which upgraded the stock to ‘hold’ from ‘reduce’ and upped its price target to €12.25 from €8.75, a 9.3% discount to Deutsche’s target.
It seemed investors had stuck more to the line of the German bank, with the shares 0.7% lower at €13.4 in mid-morning trading.