The easyJet (LSE: EZJ) share price has been on a tear over the past few weeks. Indeed, investors who were brave enough to buy the stock at its April low of around 475p, have seen a total return of 72% so far.
Considering this performance, some shareholders might be tempted to take profits. However, as the company starts flying again, it could be worth leaving some money on the table.
The easyJet share price takes off
The coronavirus crisis has had an unprecedented impact on the airline industry. For example, the airline grounded its whole fleet 11 weeks ago, which sent the easyJet share price plunging.
The sector is now starting up. EasyJet’s first flight since the end of March took off on Monday morning. The company is offering about 300 flights this week to 22 different European airports. By comparison, before lockdown began, the business operated around 47,000 trips a month.
So, the organisation is nowhere near returning to normal. But it’s a start nevertheless.
Management is planning to increase its flight schedule from the 1 July. By the end of August, the company aims to have recovered to 75% of capacity. This should have a positive impact on the easyJet share price.
These projections suggest the business is going to see lower revenues throughout the rest of the year. To cope with the decline, it has cut around 30% of its workforce. That should help the firm manage costs effectively.
Clearly, it’s going to be some time before the airline’s operations return to normal. That may mean the easyJet share price remains depressed in the short term. Still, the company’s long-term outlook is more attractive.
The group remains one of the most efficient and recognisable airline brands in Europe. Before coronavirus, it was making encouraging progress in delivering on its new strategy. It recently launched a holiday business to complement growth and had been investing in its fleet of aircraft to capitalise on the booming European aviation market.
With many of the company’s peers having run into financial trouble since the coronavirus crisis began, there’s still plenty of scope for it to expand in the years ahead. Therefore, the strength of the company’s brand means it may offer long-term recovery potential after easyJet share price decline of 50% since the start of the year.
Still, despite the company’s attractive qualities, there could be some challenges ahead for the easyJet share price in the short term. A second wave of coronavirus, or economic slowdown, could slam the brakes on management’s goal to increase flights.
As such, while the stock continues to look attractive from a long-term perspective, it might be sensible for investors to take some profits off the table after recent easyJet share price rally. Doing so would enable investors to lock in profits while leaving the door open to further improvements in the share price.
Another option available to investors is to use the cash from easyJet profits to buy other undervalued FTSE 100 shares, such as the company profiled below.
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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has 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.