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The easyJet (LSE: EZJ) share price has been one of the biggest disappointments of 2025. While the FTSE 100 is up 20% over the last 12 months, easyJet is down 7%.
It did show signs of life after Donald Trump triggered a big rally on 9 April by pausing his ‘liberation day’ trade tariffs, but has fallen back again.
I’d be even more disappointed if I actually owned the stock – and I’ve come close. It looks like one of the biggest bargains in the blue-chip index, with a price-to-earnings ratio of 7.8, less than half the FTSE 100 average of around 18.
This FTSE 100 stock is grounded
When Trump announced his tariff pause, I figured airlines would be big winners. It’s one of those sectors that always sits on the front line of global news. A recession means fewer holidays and fewer tickets sold, while rising oil prices drive up fuel costs and squeeze profits. Wars can close flight routes, while a pandemic grounds everything. Natural disasters like floods, volcanoes, and French air traffic controllers can all throw operations into chaos.
The flipside is that when conditions improve, airlines can lead the charge. I acted on that logic earlier this year and bought British Airways-owner International Consolidated Airlines Group, also called IAG, after Trump announced his pause. I’m already sitting on a paper gain of around 60%.
easyJet is making money, but the market isn’t rewarding it. In July, it posted pre-tax profits of £286m for the three months to 30 June, up £50m year on year. Not bad, but French industrial action will wipe around £25m off the full-year number, with recent higher fuel costs also taking their toll.
Takeover speculation
There was some brief excitement on 14 October when the share price jumped 11% on reports that the Mediterranean Shipping Company was exploring a potential bid to take advantage of easyJet’s low £3.6bn market cap. Valuable landing slots at Gatwick, Milan, Paris, and Lisbon make it a tempting target, analysts said, but the rumour fizzled out and the shares fell back.
Europe remains easyJet’s core market, so in contrast to high-flying IAG, it’s missing out on the more buoyant transatlantic routes. The European and UK economies are both sluggish.
On 15 October, Morgan Stanley initiated coverage of the airline sector and, like me, preferred IAG. It set an Underweight rating on easyJet with a 400p target price. Its shares trade around 481p today, so that’s not exactly bullish. It flagged rising competition and higher operating costs as reasons to stay cautious.
Hoping for lift-off
Still, recovery plays have a habit of surprising. Those who take the long-term approach often get rewarded for their patience. With a trailing yield of 2.5%, there’s at least some dividend income while investors wait.
Analysts are forecasting much brighter skies ahead, with 19 producing a median 12-month target of 624p. That’s a jet-fuelled 30% increase from today. I don’t think we’re quite there yet, but I think investors could consider buying. The low valuation offers some protection from further falls and rebound potential.
As with all cyclical stocks, it’s a case of patience and timing. easyJet is stuck on the runway, waiting for the signal to fly. Always frustrating. It will rocket one day. But not necessarily in November. I think other FTSE 100 stocks have more immediate potential today.
