Double whammy: soft demand environment and F/X headwinds; Sell
We think the factors burdening EZY in FY16 will persist or even intensify:
1) the GBP is now trading at a 30-year low vs the USD, which will gradually inflate EZY’s fuel bill, with hedging contracts expiring;
2) the GBP has also fallen against the EUR, making holidays on the continent more expensive; and (
3) political uncertainties and terror risk are unlikely to disappear quickly. We expect further earnings declines in FY17e and FY18e and cut our EPS by 25%. Downgrade to Sell, new TP 820p.