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On Thursday, JPMorgan analysts downgraded Cathay Pacific Airways Ltd . (293:HK) (OTC: OTC:CPCAY) stock from Overweight to Neutral, adjusting the price target to HK$11.00 from the previous HK$12.30. This change comes after Cathay Pacific showcased a strong financial performance for the fiscal year 2024, with solid operating cash flow (Op CF) and an increase in shareholder payouts. According to InvestingPro data, the company maintains a GREAT financial health score, with revenue growing 32.1% in the last twelve months.
The airline, which has seen its stock rise by an impressive 35% since mid-November 2024, now trades at a peak multiple of 1.2x price-to-book (P/B) value and a notably low P/E ratio of 6.9x. This surge has significantly outperformed its global peers and the Hang Seng Index (HSI), which has risen by 15% in the same period. InvestingPro analysis suggests the stock may still have room to run, with its Fair Value calculation indicating potential upside. For detailed valuation metrics and more insights, subscribers can access over 10 additional ProTips.
During an analyst briefing held on Wednesday, Cathay Pacific provided a balanced outlook for the future, acknowledging the challenges and opportunities it faces. The airline’s performance has led it to become the top-performing airline stock globally, reaching levels close to JPMorgan’s previous price target.
JPMorgan also highlighted Cathay Pacific’s dividend yield, which at 6%, is one of the highest globally. This dividend yield is seen as providing downside protection for the stock, which has influenced the decision not to move to an Underweight position. Meanwhile, the analysts suggested Singapore Airlines (OTC:SINGY) as a potentially more attractive opportunity within the Asia-Pacific region for investors looking at the airline sector.
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