Ryanair (RYAAY): Snags Deal With Boeing, Analysts see Stock Overvalued

Ryanair Holdings PLC

Ryanair & Boeing Deal

On Tuesday, May 9, 2023, Ryanair, Europe’s biggest low-cost airline, placed a firm order for 150 Boeing 737 MAX 10s with options for another 150. The deal, worth $40 billion at list prices, marks a long-awaited truce between Ryanair and Boeing after an 18-month public feud over prices upset one of aviation’s closest partnerships.

Ryanair exclusively uses Boeing 737s for its mainline fleet and is one of Boeing’s largest customers with more than 600 planes in its fleet or on order, according to its website. The new order for the largest version of Boeing’s narrow-body jet family will be delivered from 2027 to 2033, and Ryanair CEO Michael O’Leary expects the jets to be “transformational” for the airline, allowing it to almost double its traffic to 300 million passengers per year by March 2034 from the 168 million flown to the end of March this year.

The deal delivers a boost to the 737 MAX, Boeing’s best-selling jet whose deliveries have been depressed by a two-year safety crisis disruption.  Despite the concessions on price, O’Leary said the new jets would be “transformational” for Ryanair, allowing it to almost double its traffic to 300 million passengers per year by March 2034 from the 168 million flown to the end of March this year.

The MAX 10 has a list price of $135 million, but experts noted that typical discounts for firm orders run at more than 50%, and options are not booked as orders. Ryanair has long expressed interest in the 230-seat MAX 10 variant, which has yet to be certified, but O’Leary had pledged not to overpay for the 30 extra seats.

Industry sources said Ryanair had lost some advantage in negotiations and early slots as carriers including United Airlines placed significant orders for the MAX 10. However, O’Leary disagreed with that assessment, even as he acknowledged that Ryanair would have had to wait until 2028 or 2029 for its first deliveries if negotiations had drawn out longer.

Ryanair’s deal for Boeing planes signals a bright future for the airline as travel recovers from the turbulence of the last 3 years. The new jets will allow Ryanair to expand its operations, increase passenger capacity, and meet the growing demand for air travel in Europe. For Boeing, the order is a much-needed boost for the 737 MAX program and shows that the company can still win significant orders despite the safety.The deal between Ryanair and Boeing is a positive development for the aviation industry and sets the stage for further growth and innovation in the years ahead.

RYAAY Stock Forecast & Analysis

According to the Ryanair Holdings PLC ADR stock forecast from 7 analysts, the average analyst target price for Ryanair Holdings PLC ADR is USD 87.60 over the next 12 months. This suggests a potential downside of approximately 9% from the current stock price of USD 96.23, indicating a conservative outlook on the company’s future prospects.

Ryanair Holdings PLC ADR’s average analyst rating is a “Strong Buy”, indicating that analysts are generally bullish on the company’s long-term prospects. This rating is based on the company’s strong market position as Europe’s largest low-cost carrier, its low-cost structure, and its strong balance sheet.

Stock Target Advisor’s own stock analysis of Ryanair Holdings PLC ADR is Slightly Bullish, which is based on 6 positive signals and 5 negative signals. The positive signals include factors such as strong earnings growth, a high dividend yield, and positive analyst recommendations, while the negative signals include factors such as declining revenue growth and a high debt-to-equity ratio.

Over the past week, Ryanair Holdings PLC ADR’s stock price has declined by -0.84%, while over the past month, it has increased by +2.37%. However, over the last year, the stock price has increased by +12.60%, reflecting the company’s resilience in the face of the COVID-19 pandemic and its successful expansion into new markets.

Overall, Ryanair Holdings PLC ADR’s stock forecast and ratings suggest that the company is well-positioned for long-term growth, but investors should carefully consider the risks and uncertainties associated with the aviation industry, as well as the company’s financial and operational performance, before making any investment decisions.

 

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