2. Ryanair Holdings plc (NASDAQ:RYAAY)
% of shares shorted: 3.93%
Number of Hedge Fund Holders: 20
The Ireland-based Ryanair Holdings plc (NASDAQ:RYAAY) offers scheduled airline services throughout Europe and beyond, in addition to ancillary services like in-flight shopping, rental car services, and travel insurance. It was founded in 1996 and provides a range of travel-related services through a web page and mobile application, in addition to handling and maintaining planes.
The biggest loss in shares since 2016 occurred when Ryanair’s Q1 2024 profit dropped 46%, underperforming estimates year over year. Michael O’Leary, the CEO, issued a warning about the ongoing deterioration in prices, predicting double-digit decreases in Q2 2024.
However, Muneeba Kayani, an analyst at Bank of America Securities, has reiterated her positive view on the airline services company by keeping a Buy rating. This assurance comes from Ryanair’s deliberate focus on gaining market share with its “load active, yield passive” strategy, even in the face of a notable year-over-year decline in first-quarter fares. Kayani believes that even in times of low consumer demand, this aggressive approach to securing market share will pay off in the long run.
Ryanair has projected that it will carry between 198 million and 200 million passengers by FY25, confirming its commitment to its expansion strategy. Kayani sees solid cash flows and predicted above-average earnings growth from FY24 to FY29 as the main drivers for a higher target P/E multiple, despite a downward revision in FY25 net income expectations.
Conventum – Alluvium Global Fund stated the following regarding Ryanair Holdings plc (NASDAQ:RYAAY) in its Q2 2024 investor letter:
“Ryanair Holdings plc (NASDAQ:RYAAY) (down 22.3%) released solid full year results, generally in-line with expectations. The only negative was the continued Boeing delivery delays (impacting passenger growth forecasts). To the positive, demand remains strong, the Pratt & Whitney engine issue continues to affect competitors, and industry consolidation is helping fare momentum. Ryanair has grown capacity by 36% since the pandemic, whereas almost all competitors are at lower levels. Management has demonstrated confidence with the EUR 700m buyback and the dividend being declared. There was no need for us to revise our assumptions, so our view of maintainable earnings and valuation are unchanged. As the share price fell further below our valuation, we took the opportunity to increase our holding which now stands at 4.6% of the Fund.”
With a strong balance sheet and the ability to support share buybacks with free cash flow, Ryanair Holdings plc (NASDAQ:RYAAY) has sound financial standing and a positive future.
It is the Best Airline Stocks To Buy According To Short Sellers and analysts have collectively rated the stock as a “Buy.” The average price objective of $158.5 indicates a possible gain of 49.90% from the current stock price of $105.74.
