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What can AI and price momentum indicators tell us about easyJet shares?

What can AI and price momentum indicators tell us about easyJet shares?

Shares in easyJet [LON:EZ] have been showing some signs of life recently, coming back off a summer low when they traded at around the 418p mark. The stock remains well off its 52 week high of 591p, but has it been building enough momentum? And how does it compare with its peers?

The stock has had a relatively good run since this time last year, and I’d be hesitant to bet against it. Bridgewise rates it a 68% on income but does not like its balance sheet, which it rates as relatively weak for a passenger airline. This is a big contributor to its underperform rating.

Solid numbers feeding through

There are some solid numbers starting to feed though however, which could power future share price growth. easyJet has been reporting an increase in quarterly pre-tax profits and growth in passenger numbers. Look to its easyJet Holidays package tourism arm to provide further upside in the next 6-12 months.

The net cash position looks quite stable, but again, should it be even better for this sector? It IS improving, however, so again we would anticipate some further upside here if the airline continues on its current trajectory.

eayJet is projecting full capacity of 100m seats in 2024 with a further 16 aircraft being delivered this year. Effective pricing and a very competitive network of destinations is also giving easyJet an edge. Revenue per set, a key industry benchmark, is forecast to continue on positive growth trend through to the end of the year.

easyJet Peers

Source: Bridgewise

easyJet shares look fairly priced

We’d obviously like to see a better dividend from easyJet, as it looks relatively stingy for an airline of this scale. The shares themselves are still fairly priced, although only just. For the sector, they are starting to look expensive. But most airlines are still trading at cheap levels, and often at big discounts to where they were before the Covid pandemic. I suspect some investors have simply not returned to airline stocks since the 2020 shock.

Short term, easyJet share price technicals do look to be improving, with a decent chance it will beat that 52 week high. The RSI and stochastic oscillator are still in negative territory at time of writing, so anticipate some short term reversals.

easyJet share price technicals

Source: Trend Intelligence

Taking a look at the medium term trend data for easyJet stock, courtesy of Trend Intelligence, we can see the stock price is above all three of Trend’s moving averages. The averages are reorganising into a positive configuration. Neutrally, the price trades within the Japanese Cloud indicator, the delay line is positively above the cloud. This is a neutral indicator.

The second chart is the D* momentum indicator, which is breaking positive as the red line is below the green line. The third chart is the R* momentum indicator – here we see the white signal line breaking positive. This too is a positive indicator.

Finally we have the momentum indicator, which is neutral, as the red M* line is just above the white signal line. Trend Intelligence says its medium outlook for easyJet is that the share price will exhibit a moderate positive trend in the weeks and months ahead. The above price chart summary shows price action operating above off three of Trend’s moving averages and within the Japanese Cloud. Most of the momentum indicators are producing positive signals.

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This article does not constitute investment advice.  Do your own research or consult a professional advisor.

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