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Investing.com - JPMorgan downgraded Singapore Airlines Ltd (OTC:SINGY). (SIA:SP) (OTC:SINGF) from Overweight to Neutral and lowered its price target to SGD7.00 from SGD8.00 following the airline’s first-quarter fiscal 2025/26 earnings report. The airline, which maintains a robust GREAT financial health score according to InvestingPro data, currently trades at an attractive P/E ratio of 7.9x.
The downgrade comes after Singapore Airlines reported quarterly results that JPMorgan characterized as a "major miss," despite previously announced strong operational performance with robust volume growth. The company maintains strong fundamentals with a healthy 32% gross profit margin and a significant 7.8% dividend yield.
JPMorgan attributed the earnings disappointment primarily to reduced savings from fuel costs due to Singapore Airlines’ oil hedging strategy, which limits gains when oil prices fall but provides protection during price volatility.
The bank also noted timing issues for non-fuel costs contributed to the results, though these costs showed a sequential easing trend, declining 2% quarter-over-quarter, while yields remained relatively resilient despite competitive pressures.
Singapore Airlines shares have risen approximately 18% year-to-date, outperforming the Straits Times Index’s 12% gain, but JPMorgan believes near-term share price gains may be limited due to the earnings miss.
In other recent news, Nomura/Instinet has upgraded Singapore Airlines Ltd. stock from Neutral to Buy. The firm also raised the price target to SGD8.04, up from SGD6.75. This upgrade is based on a positive earnings outlook for the fiscal years 2026 and 2027. Analysts highlighted that the airline’s valuation appears attractive when compared to industry peers, with potential for high dividend yields. Singapore Airlines’ current trading price reflects a fiscal year 2026 forecasted price-to-earnings (P/E) ratio of 8.6 times. This is notably below the historical one-year-forward average of 18 times observed from 2015 to 2020, before the pandemic. Nomura analysts have adjusted their valuation horizon to FY26, maintaining their valuation on a P/E basis, pegged at 10 times the FY26 forecasted core earnings per share of SGD0.80. These developments are significant for investors considering Singapore Airlines.
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