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Thursday - UBS analyst Thomas Wadewitz revised the price target for Allegiant Travel Company (NASDAQ:ALGT) shares, reducing it to $61 from the previous target of $93, while keeping a Neutral rating on the stock. According to InvestingPro data, ALGT’s stock has fallen significantly over the past three months, with its RSI suggesting oversold territory. Wadewitz’s assessment followed a series of airline presentations and remarks that indicated a downturn in first-quarter trends, with consumer weakness expected to persist beyond the quarter.
In response to the observed market conditions, UBS has adjusted its earnings per share (EPS) forecasts for several airlines, including United Airlines Holdings Inc (NASDAQ:UAL), Alaska Air Group Inc (NYSE:ALK), Frontier Group Holdings Inc (NASDAQ:ULCC), Allegiant Travel, and JetBlue Airways Corporation (NASDAQ:JBLU). While ALGT’s current market cap stands at $947 million with a total debt of $2.15 billion, InvestingPro analysis indicates the company is expected to return to profitability this year. Prior adjustments had already been made to the EPS forecasts for Delta Air Lines, Inc. (NYSE:DAL) and American Airlines Group Inc (NASDAQ:AAL).
The new EPS estimates for 2025 show a decrease of 12% for UAL, 9% for ALK, 30% for ULCC, and a significant 34% for ALGT. This recalibration by UBS reflects a projection of softer demand and a revenue per available seat mile (RASM) performance that is 2 to 3 percentage points lower than previous forecasts.
Alongside the adjustment for Allegiant Travel, UBS also lowered its price targets for other airlines, setting UAL’s new target at $107 down from $140, ALK’s at $75 down from $87, and ULCC’s at $7 down from $10. Despite the downward revisions, UBS changed its stance on Southwest Airlines Co (NYSE:LUV), upgrading the stock to a Neutral rating from a previous Sell.
In other recent news, Allegiant Travel Company reported its fourth-quarter 2024 earnings, surpassing analyst expectations with an earnings per share (EPS) of $2.10, compared to a forecast of $1.19. The company’s revenue also exceeded projections, reaching $627.7 million against the anticipated $622.34 million. Raymond (NSE:RYMD) James analyst Savanthi Syth subsequently raised the price target for Allegiant’s shares to $125 from $110, maintaining an Outperform rating. Allegiant has revised its full-year capacity growth forecast from 17% to 13% due to softer demand in leisure travel during non-peak periods. The company noted a 2.9% increase in passenger traffic for February 2025 compared to the previous year, although the load factor decreased by 4.5 percentage points to 79.5%.
Additionally, Allegiant announced a change in its executive team, with Chief Operating Officer Keny F. Wilper stepping down after 23 years, transitioning to an advisory role. Tyler Hollingsworth has been appointed as interim COO. In January 2025, Allegiant reported a 6.5% increase in passengers compared to the previous year, though the load factor decreased by 1.9 percentage points to 78.8%. The company anticipates its consolidated earnings per share to be at the lower end of initial guidance, approximately $1.50 per share, with the airline contributing around $1.75 per share. Allegiant’s ongoing debt reduction efforts and the potential sale of its Sunseeker resort are expected to further strengthen its financial position.
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