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Davy Stockbrokers has cut its share price target on Ryanair from €20 to €17, following a fall in the Irish airline's valuation on the back of its surprise announcement to recognise unions last week.
Currently trading at €14.93 in Dublin, the airline has seen €1.5 billion wiped off its market capitalisation, as the share price fell by almost 10 per cent on Friday, following its assertion that it will recognise unions, a significant step change in strategy for the airline.
According to Davy, the cut in the price target reflects “market surprise and uncertainty” following the announcement, but said that it has maintained its “outperform” rating on the airline, although it expects the stock to remain range bound near term.
The Dublin broker expects Ryanair management to continue to execute on its strategy to deliver 200 million passengers on about 600 aircraft by 2024 .
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The airline’s decision to recognise a pilots’ union came as pilots threatened a one-day strike on December 20th affecting passengers in Cork, Shannon and Dublin, with planned stoppages also across Germany, Portugal, Spain, Sweden and Italy over the busy Christmas period. However, while pilots have now suspended this strike, the union is reserving the right to reinstate it, should it not be sufficiently happy with the outcome of talks with management on Tuesday.