JET2: Future Margins Will Recover As Competition Eases And Guidance Holds

Analysts have reduced their blended price target for Jet2 by roughly 3 percent, to about £18.94 per share from £19.37, reflecting slightly softer expectations for revenue growth and profit margins despite broadly supportive rating stances.

Analyst Commentary

Recent Street research on Jet2 reflects a mixed but generally constructive stance, with several firms recalibrating price targets while maintaining supportive ratings.

Bullish Takeaways

• Bullish analysts continue to see upside in Jet2 shares, with price targets around 1,850 to 1,857 GBp implying meaningful headroom versus current levels despite recent trims.
• JPMorgan, which keeps an Overweight rating, signals confidence that Jet2 can execute on its growth strategy and protect margins over the medium term, even as near term conditions soften.
• Updated targets still embed expectations for solid capacity growth and improving operational efficiency, suggesting that recent share price weakness is viewed more as a reset rather than a structural downgrade.
• The persistence of Buy and Overweight stances indicates that valuation is seen as attractive relative to Jet2's execution track record and potential for earnings recovery.

Bearish Takeaways

• Bearish analysts highlight that near term trends look weak, pointing to intense competition that could cap pricing power and weigh on revenue growth.
• Equal Weight ratings and only modest target upgrades, such as the move to 1,450 GBp, reflect caution around upside, with limited conviction that earnings can outperform current expectations.
• Target cuts from prior levels above 2,000 GBp to the mid 1,800s suggest a reassessment of margin resilience, particularly if cost pressures or discounting escalate.
• The concentration of targets in a tight band just below 1,900 GBp underscores a view that Jet2's risk reward is more balanced, dependent on flawless execution and a gradual improvement in market conditions.

What's in the News

• Morgan Stanley initiated coverage of Jet2 with an Equal Weight rating and a 1,420 GBp price target, citing weak near term trends amid intense competition (periodical).
• Jet2's board declared an increased interim dividend of 4.5 pence per share for 2026, up from 4.4 pence. The dividend is payable on 13 February 2026 to shareholders on the register as of 9 January 2026 (key development).
• The board confirmed earnings guidance for the year ending 31 March 2026. It indicated expected operating profit (EBIT) of about £453 million, excluding London Gatwick start up costs, in line with company compiled consensus (key development).

Valuation Changes

• The consensus analyst price target has fallen slightly from about £19.37 to £18.94 per share, reflecting a modest reassessment of upside potential.
• The discount rate has edged down marginally from roughly 10.39 percent to 10.35 percent, indicating a very small reduction in perceived risk or required return.
• Revenue growth expectations have been trimmed slightly from around 7.83 percent to 7.76 percent, pointing to a marginally softer top-line outlook.
• Net profit margin assumptions have slipped modestly from approximately 4.78 percent to 4.70 percent, suggesting a minor downgrade to Jet2's medium-term profitability profile.
• The future P/E has eased slightly from about 9.43x to 9.38x, implying a small contraction in the multiple investors are expected to pay for forward earnings.