Allegiant Travel stock initiated with Neutral rating by UBS on stable trends

Investing.com - UBS initiated coverage on Allegiant Travel Company (NASDAQ:ALGT) with a Neutral rating and a $59.00 price target on Monday. The stock, currently trading near $60, has shown significant momentum with a nearly 10% gain over the past week, according to InvestingPro data.

UBS analyst Atul (NSE:ATLP) Maheswari expects Allegiant’s second-quarter results to align with guidance, forecasting earnings per share of $0.74 compared to the FactSet consensus of $0.78 and company guidance of $0.00-$1.00. The company is scheduled to report earnings on July 30, with InvestingPro analysis indicating expectations for improved profitability this year.

The firm projects revenue per available seat mile (RASM) to decline 11.5% year-over-year, slightly below the consensus estimate of -11.4%, noting that while bookings have remained solid, lower yields have created revenue pressure in the second quarter.

On the cost side, UBS anticipates cost per available seat mile excluding fuel (CASM-ex) will decrease year-over-year, estimating a 3.3% reduction driven by mid-teens capacity growth, though this decline should moderate compared to the first quarter.

The investment bank notes that Allegiant stock has recovered significantly from April lows and currently trades at approximately 18 times UBS’s 2025 earnings estimate, suggesting that further upside would require positive earnings revisions.

In other recent news, Allegiant Travel Company reported its Q1 2025 earnings, surpassing analyst expectations with an earnings per share (EPS) of $1.81, compared to the forecasted $1.70. Despite a slight revenue miss, with actual revenue at $699.1 million against a forecast of $701.23 million, the company’s focus on cost management and strategic fleet adjustments was highlighted as a key factor in its performance. In addition, Allegiant experienced a 9.2% increase in scheduled service passengers in May 2025 compared to the same month last year, with 1,545,033 passengers transported. Evercore ISI recently upgraded Allegiant’s stock rating from In Line to Outperform, setting a price target of $75.00, as the company plans to sell its Sunseeker Resort to focus on its core airline operations. The anticipated sale is expected to benefit both Allegiant and the potential buyer, with the property likely requiring additional investment. Meanwhile, Goldman Sachs maintained a Neutral rating for Allegiant, with a price target of $56.00, noting the company’s Q1 earnings beat but expressing caution due to Allegiant’s lower-than-expected EPS guidance for the June quarter. Allegiant has also withdrawn its fiscal year 2025 airline-only EPS guidance due to economic uncertainties and demand fluctuations. Despite these challenges, Allegiant anticipates remaining profitable in 2025 by leveraging its flexible business model and adjusting capacity during slower periods.

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