Liberum lifts Ryanair target on Boeing compensation

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Stockbroker Liberum has hiked its target price for Ryanair Holdings PLC (LON:RYA) by a whole euro, to EUR16 from EUR15, but that’s not enough for analyst Gerald Khoo to budge the broker’s ‘hold’ recommendation.


Khoo in a note highlighted that the compensation from Boeing, from the 737 MAX safety issues and grounding, has helped Ryanair’s balance sheet during the pandemic.


The exact compensation terms remain confidential and aren’t known, but, Liberum estimates at least EUR700mln of concessions from Boeing.


“Ryanair’s balance sheet and liquidity have benefitted from the compensation from Boeing,” Khoo said.


“To put the estimated EUR700m into context, Ryanair raised EUR400m in its equity placing and EUR850m in its bond issue, both in September 2020.


“So, while it is not a decisive or critical amount of capital, being only EUR0.6 per share and less than 5% of the current market capitalisation, it is also not a trivial sum in the context of the fundraises Ryanair has had to execute to reinforce its balance sheet in the face of the pandemic.”


The analyst added: “Ryanair’s balance sheet and liquidity have benefitted from the compensation from Boeing.


“To put the estimated EUR700m into context, Ryanair raised EUR400m in its equity placing and EUR850m in its bond issue, both in September 2020.


“So, while it is not a decisive or critical amount of capital, being only EUR0.6 per share and less than 5% of the current market capitalisation, it is also not a trivial sum in the context of the fundraises Ryanair has had to execute to reinforce its balance sheet in the face of the pandemic.”

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