Is It Too Late To Consider Buying Jet2 plc (LON:JET2)?
Thursday, Apr 10, 2025 3:38 am ET
The airline industry has always been a rollercoaster ride for investors, with economic uncertainties and market volatility often leading to significant fluctuations in stock prices. jet2 plc (LON:JET2), a UK-based leisure travel company, has been no exception to this trend. With its stock down 11% over the past month, many investors might be wondering if it's too late to consider buying Jet2. However, a closer look at the company's financial health and market position suggests that there might still be opportunities for savvy investors.
Jet2's strong financials and strategic focus on package holidays have helped it weather economic storms more effectively than some of its competitors. The company's impressive earnings growth, high return on equity (ROE), and strong balance sheet are all indicators of a company that is well-positioned to navigate uncertain times. Additionally, Jet2's management team is well-seasoned and has a clear growth trajectory, which has helped the company to gain market share in the UK.

One of the key factors that sets Jet2 apart from its competitors is its focus on package holidays. This segment accounted for more than three-quarters of Jet2's revenue in the six months ended March 2024, providing a stable revenue stream. Additionally, Jet2 has a strong balance sheet and net cash position, which allows it to weather economic storms more effectively than some of its competitors. The company also has a healthy order book out to the start of the next decade at advantageous prices, ensuring that it can continue to operate efficiently even in uncertain economic conditions.
Jet2's management team is well-seasoned and has a clear growth trajectory, which has helped the company to gain market share in the UK. The company has the biggest share of licenses that protect travelers and their money if the travel operator they booked with were to fail, further enhancing its market dominance. This focus on package holidays and strong financial position has allowed Jet2 to outperform its competitors, with shares rising 15% this year while rivals like ryanair and TUI have fallen.
However, Jet2 does have a potential weak spot: its reliance on UK customers. This will be tested by the upcoming UK government’s budget, which is expected to focus on tax hikes and spending cuts that might lead to thriftier consumers going forward. “Any adverse impact on UK household disposable income is a risk,” said Gerald Khoo, an analyst at Panmure Liberum. “Longer term, its focus on the UK could make it harder to continue to grow than peers with Pan-European base networks.”
Despite this potential risk, analysts tracked by Bloomberg are overwhelmingly positive on Jet2, with the stock garnering 14 buy-equivalent recommendations and no holds or sells. Meanwhile, the 12-month average price target suggests the shares could rise more than 30% from current levels. Jet2’s market capitalization has increased from less than £100 million ($131 million) at the start of 2010 to £3.1 billion today, making it the biggest company on AIM, the London Stock Exchange’s junior market for growth companies.
In conclusion, while Jet2's recent stock price decline might be a cause for concern for some investors, a closer look at the company's financial health and market position suggests that there might still be opportunities for savvy investors. Jet2's strong financials, strategic focus on package holidays, and positive analyst recommendations all point to a company that is well-positioned to navigate uncertain times and continue to grow. However, investors should also be aware of the potential risks associated with Jet2's reliance on UK customers and the upcoming UK government’s budget. Ultimately, the decision to buy Jet2 shares will depend on an investor's risk tolerance and investment goals.