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Travel and leisure shares rise 1.3 percent, the top performingsector in Europe, after easyJet reports a rise in revenue of 10.5percent and lifts full-year guidance.
The low-cost airline sees full-year pretax profit between 450 million and480 million pounds, ahead of forecasts for a 433 million pound profit.
"The capacity situation continues to support a rising yield environment anddespite a likely marginal impact from the recent hot weather in the UK, theupgrades persist," analysts at Nomura write in a note, raising their targetprice and reiterating a "buy" rating on the stock.
"With a strong improvement in the cash position across the quarter, we seethe balance sheet headroom rising."
EasyJet is up 6.4 percent, the top performing stock on the pan-EuropeanFTSEurofirst 300, followed by Irish airline Ryanair, up 3.5percent.
Analysts at Jefferies say that while the easyJet results are impressive,Ryanair represents the better value investment case.
"After an enviable share price run, and as the business matures, we believevaluation (of easyJet) is coming more into focus. It is not overly demanding...but we see more opportunity in Ryanair," Jefferies says in a note, raising itstarget price on easyJet but maintaining a "hold" rating.
While easyJet trades at a price/earnings discount to Ryanair, at 13.7compared to 14.5 according to Thomson Reuters StarMine data, Jefferies seesvalue in Ryanair on a relative returns basis, as well as when examined on anenterprise value/invested capital basis.
Reuters messaging rm://alistair.smout.thomsonreuters.com@reuters.net
