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On Friday, Evercore ISI analysts adjusted their outlook on Frontier Group Holdings Inc (NASDAQ: NASDAQ:ULCC), reducing the price target to $5.00 from the previous $7.00, while keeping an In Line rating on the stock. According to InvestingPro data, analyst targets for ULCC now range from $3.00 to $10.00, with the stock currently trading at $3.57 after declining nearly 50% year-to-date. The revision follows Frontier's recent update to its first-quarter guidance, which now aligns with the conservative adjustments made by larger carriers earlier in the month. This change was attributed to a shift in revenue management strategies. InvestingPro analysis reveals that Frontier operates with a significant debt burden, with a debt-to-equity ratio of 7.4x, while maintaining a modest revenue growth of 5.18% in the last twelve months.
Frontier's capacity remained unchanged in January, saw a 6% increase in February, and experienced a 9% rise in March despite the challenges posed by the Easter holiday shift. The airline has observed a positive trend in bookings as Easter approaches but has opted for a cautious approach to planning for May and June due to the unpredictable nature of March's outcomes.
The company is now planning to reduce its capacity by 3% year-over-year in the second quarter, contrasting with previous expectations of a 5% increase. Furthermore, Frontier intends to maintain approximately flat capacity in the second half of the year, a significant adjustment from the anticipated 10% growth, pending clear signs of demand recovery.
Evercore ISI's analysis suggests that these results underscore the necessity for consolidation within the budget airline sector. The firm's position reflects a response to the current market dynamics and Frontier's strategic adjustments to navigate through a period of fluctuating demand. Despite trading at a relatively low P/E ratio of 9.92x, InvestingPro analysis indicates several challenges ahead, with 15+ additional insights available to subscribers, including detailed financial health metrics and growth projections.
In other recent news, Frontier Group Holdings, Inc. has revised its first-quarter 2025 outlook, citing weakened demand in March as a key factor. The company now anticipates a 5% revenue growth, a reduction from its previous forecast, and expects an adjusted pre-tax loss margin of about 5%. Analysts from UBS and Citi have both maintained a Neutral rating on Frontier's stock, with price targets set at $7.00 and $7.25 respectively, reflecting concerns about ongoing consumer demand challenges and potential future expenses. Meanwhile, TD Cowen has increased its price target to $10.00, maintaining a Hold rating and noting positive developments in the company's revenue and network strategies.
Additionally, Frontier Group's Chief Accounting Officer, Josh Wetzel, has announced his resignation effective May 30, 2025. The company is currently searching for a successor to ensure a smooth transition. Frontier reported total liquidity of approximately $885 million as of March 31, 2025, emphasizing its focus on maximizing liquidity amid current market conditions.
The company has also reduced its scheduled capacity for the second quarter of 2025, particularly on off-peak days, in response to the weakened demand. Frontier's management has decided not to reaffirm its full-year guidance for 2025 due to the uncertain environment. Investors are closely monitoring these developments as the company progresses with its operational strategies and financial performance.
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