The last 12 months have seen the easyJet (LSE: EZJ) share price fall 38%. And it’s down over 20% in the past six months alone. Like many of its peers, the stock has been hit hard during the pandemic, with the firm’s operations being brought to a halt for a large chunk of the last two years.
However, recent times have provided the business with optimism. More countries are ditching their restrictions in return for normal procedures. As such, should I be buying easyJet stock at the current price? Let’s take a look.
Encouraging results
Well, the outlook for easyJet certainly seems to be improving. The firm’s latest results for the three months to 31 December 2021 showed that revenue for the quarter stood at £805m. When compared to the £165m recorded for the same period in 2020, it is clear easyJet has taken large strides since the worst of the pandemic. Further, while the company still reported a loss, it was nearly half (£213m) of the £423m seen last year. And if this loss continues to be cut, I’d imagine this will lead to a rise in the easyJet share price.
We can also expect to see higher passenger volume in 2022. And this will provide easyJet with hope for the months ahead. As I recently mentioned in an article where I stated how I would buy shares in easyJet competitor IAG, passenger volume is expected to reach 3.4bn in 2022. This is nearly twice as high as 2020. This rise in volume is due to the reopening of borders globally, as more countries have dropped restrictions to allow smoother travel.
As I also mentioned, easyJet may have an edge over competitors with its cheap flight deals. As eager passengers look to potentially fly out for budget holidays, the firm is in a prime position to capitalise on this. I think this part of the business could excel in the next few months. And the share price could rise as a result.
easyJet share price headwinds
There are a few risks I must account for, however.
Firstly, while we seem to be coming to the end of the pandemic, an emergence of a new strain could potentially place us straight back in it. Any sign of this would have negative connotations for the easyJet share price.
Secondly, the price of jet fuel may increase because of the Ukraine conflict. The fear of decreasing supply could have a negative impact on the company’s operation. Costs will likely rise in the coming months.
What I’m doing
Despite the risks associated with easyJet, I think the outlook is bright for the firm. While its latest results show the business is heading in the right direction, what we can expect to see in 2022 will only bolster these figures. I also think that as consumers look to jet off for the first time post-pandemic, cheap options such as easyJet will be in high demand (this certainly applies to me). As such, I would be willing to buy easyJet stock today.
Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
