EasyJet share price braces for a big rally if this happens

The aviation industry has staged a strong recovery, with many companies reporting higher revenues than before the pandemic. As a result, most airline stocks have jumped sharply from their pandemic lows. EasyJet (LON: EZJ) share price jumped to a high of 527p, the highest point since May last year. It has jumped by over 85% from 2022 lows. The JETS ETF is ~24% above last year’s low.

EasyJet’s business is booming

In March, I wrote a relatively popular article that compared EasyJet and IAG, the parent company of British Airways. In that report, I argued that EasyJet’s strong balance sheet and low cost business model made it the better investment. 

Results published on Tuesday showed that the company’s business is booming. The number of passengers increased by 35% in the six months to March 31st. The company’s RPS jumped by 43% as its ticket yield rose by 31%. It had 1,600 flights per day during the Easter holiday.

In all, the number of flights increased to 99,273 in the second quarter while the load factor jumped to 88%. In the same period in 2022, the company carried 82k people and a load factor of 78%. Therefore, revenue for the first half of the year is expected to be between £2.69 billion and £3.1 billion. 

Fundamentally, EasyJet is one of the best airline stocks to invest in. It has a large and growing market share in the industry. And the company is expected to have strong growth as the European economy expands at a faster pace than expected.

Further, EasyJet has a strong balance sheet after it repaid a 500 million euro bond. It now has a net debt of just £0.2 billion. Also, the company has a modern efficient fleet and growing ancillary revenue figures.

EasyJet share price forecast

EZJ chart by TradingView

On the daily chart, we see that the EZJ share price has been in a strong bullish trend in the past few months. In this period, the stock has remained above the 50-day and 100-day exponential moving averages. 

A closer look shows that it now sits at an important resistance point where it failed to move above on April 13, March 7, and January 26th. Therefore, a move above this level will bring the next key resistance at 602p to view. This price was the highest level in April last year. 

However, we still can’t rule a major pullback since the stock seems like it has formed a triple-top pattern whose neckline is at 440p.

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