Frontier Group stock price target raised to $4.00 from $3.50 at UBS

Investing.com - UBS raised its price target on Frontier Group Holdings Inc (NASDAQ:ULCC) to $4.00 from $3.50 while maintaining a Neutral rating on the airline stock. The stock, currently trading at $4.15, has shown significant momentum with a 14% gain over the past week, though it remains down over 50% in the past six months. According to InvestingPro analysis, Frontier Group appears undervalued based on its Fair Value metrics.

UBS expects Frontier to report second-quarter results in line with the company’s outlook, noting that as of May 20, the airline was tracking according to guidance provided on May 1.

The firm models revenue per available seat mile (RASM) growth of 1.2% for the second quarter, compared to Frontier’s guidance of low-single-digit percentage growth on a stage-adjusted basis.

On the cost side, UBS anticipates significant inflation in the second quarter as Frontier reduced close-in capacity in response to rapidly deteriorating demand, with fewer sale-leaseback gains year-over-year contributing to an expected 23% increase in cost per available seat mile excluding fuel.

UBS projects a second-quarter loss of $0.28 per share, compared to consensus estimates of a $0.27 loss and company guidance of a loss between $0.23 and $0.37, while noting that market confidence in Frontier’s projected return to profitability in the second half will depend on evidence of strong third-quarter RASM growth.

In other recent news, Frontier Group Holdings has maintained its guidance for an adjusted loss per share in the second quarter of 2025, with stable travel demand following earlier disruptions. UBS has revised its price target for Frontier Group Holdings to $3.50 from $4.00, while keeping a Neutral rating. The firm noted that the company reported a first-quarter loss and a decline in Revenue per Available Seat Mile (RASM) in March. UBS forecasts a 23% year-over-year increase in Cost per Available Seat Mile, excluding fuel, for the second quarter, with earnings per share estimated between -$0.23 and -$0.37. Frontier Airlines also introduced a new benefit for its FRONTIER Miles Elite Platinum and Diamond Status members, offering free unlimited companion travel to enhance its loyalty program. The airline’s strategic focus includes capacity optimization and cost management, aiming for profitability in the second half of 2025. Analysts have pointed out the need for Frontier to demonstrate strong improvement in third-quarter RASM growth to instill market confidence in its profitability goals. Frontier’s management remains optimistic, supported by moderating industry capacity and strategic investments.

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