The easyJet share price fell another 13% yesterday. Should I buy?

first_img Enter Your Email Address I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Jonathan Smith and The Motley Fool UK have no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Our 6 ‘Best Buys Now’ Shares The easyJet share price fell another 13% yesterday. Should I buy? Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Jonathan Smith | Tuesday, 24th March, 2020 | More on: EZJ center_img “This Stock Could Be Like Buying Amazon in 1997” The coronavirus has caused many industries to struggle for various reasons. The sectors that rely heavily on retail engagement have struggled due to calls for consumers to stay at home. Businesses with a large international presence are being hampered by supply chain disruption. But arguably, the industry hardest hit is travel.Evidence from this can be seen by a 13% fall in the share price of easyJet (LSE: EZJ) in trading on Monday. This compounds an already dire 2020 performance, with the share price down 65%.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Why has easyJet slumped?Let’s first rewind to six months ago. At the end of the fiscal year for easyJet, profit for the 2019 period was down 3.4%, but the overall report was fairly positive. Profit projections for the 2020 fiscal year were set slightly lower again (£420m vs £430m), but still with the business generating a healthy profit margin. At this point, there was no reason for investor concern.If we fast forward to early February, the share price was climbing back above 1,500p, eyeing up its record highs of around 1,850p. Then came the coronavirus and the impact on travel. From the middle of February onward, it has seen a linear decline.The main driver of this has been the lack of bookings or cancelled bookings from customers. For some this has been voluntary, with people not wanting to make a trip they had planned. But for others this has been forced by government travel bans, or lockdowns in destination cities.Since easyJet only has an operating margin of 7.3%, it’s very sensitive to such a drop in bookings. And it can’t really discount prices in order to encourage bookings, as it’s already ‘budget’ in price. What’s the outlook from here?Last week, easyJet came out with measures similar to sector peers, announcing that it would be cutting routes. This can be seen as a logical cash saver in the short term. It has also requested help from the UK government in order to help provide the firm with liquidity.And that liquidity may soon be needed, even though the balance sheet for the company looks robust on the surface. It currently has £1.6bn in cash and announced a further £427m worth of credit it has available to it. This sounds like a lot, but the firm is eating up cash every day.So where does this leave the share price and anyone wondering whether to buy? For me, it’s a possible buy if certain things happen. The main spark that could trigger a halt to the sell-off would be an announcement from the government of some kind of rescue plan. While not being nationalised, having a guarantee of support could put a floor on the share price. This floor would limit the drop as it would be protected from going bust. Given the company’s planes alone are valued at £4bn as assets, confirmation by the government would make me seriously consider buying at this cheap level. The assets alone provide the company with an intrinsic value. It would be a long-term buy and would need plenty of recovery time, but in my opinion the downside would be limited and it could be rewarding for patient buyers. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. See all posts by Jonathan Smith Simply click below to discover how you can take advantage of this. Image source: Getty Images last_img

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