Fannie Mae, Freddie Mac shares tumble after conservatorship comments
Thursday saw UBS analyst Thomas Wadewitz revise the price target for Frontier Group Holdings Inc (NASDAQ:ULCC), reducing it to $7.00 from the previous $10.00, while maintaining a Neutral rating on the stock. Currently trading at $5.70, the stock sits well below its 52-week high of $10.26, though it has shown resilience with a 36.7% gain over the past six months. According to InvestingPro analysis, Frontier currently appears slightly undervalued, with 12 key insights available to subscribers. Wadewitz’s assessment follows a closer examination of recent airline presentations and commentary, which indicated a softer performance in the first quarter, with consumer weakness expected to continue as a challenge beyond this period.
The analyst’s report points to a broader trend of demand softness within the airline industry, prompting downward revisions in earnings per share (EPS) forecasts for several carriers. For Frontier Group, which currently maintains a weak overall financial health score according to InvestingPro data, analysts still project EPS of $0.96 for FY2025 despite the challenges. This includes a 12% cut for United Airlines Holdings Inc (NASDAQ:UAL), a 9% reduction for Alaska Air Group Inc (NYSE:ALK), a 30% decrease for Frontier Group, and a 34% drop for Allegiant Travel Company (NASDAQ:ALGT). Wadewitz attributed these adjustments to a softer underlying demand trend and revenue per available seat mile (RASM) performance that is 2 to 3 percentage points worse than earlier forecasts.
Consequently, UBS has also lowered its price targets for other airlines, setting United Airlines’ new target at $107, down from $140, Alaska Air Group’s at $75, down from $87, and Allegiant Travel’s at $61, down from $93. Despite these downward revisions, UBS has upgraded its rating on Southwest Airlines Co (NYSE:LUV) to Neutral from Sell, signaling a shift in perspective on that airline’s stock.
Wadewitz’s comments and the adjusted forecasts reflect UBS’s latest outlook on the airline sector, which seems to be grappling with ongoing consumer demand challenges. The lowered price target for Frontier Group Holdings Inc is indicative of the financial headwinds facing the industry, as airlines adjust to market conditions and revise their financial expectations accordingly.
In other recent news, Frontier Group Holdings Inc. reported a substantial earnings surprise in its fourth-quarter 2024 results, with earnings per share (EPS) reaching $0.23, significantly surpassing the forecast of $0.04. The airline’s revenue for the quarter increased by 12% year-over-year to $1 billion. UBS analyst Thomas Wadewitz raised the price target for Frontier Group to $10.00, citing the company’s strong fourth-quarter performance and optimistic guidance for fiscal year 2025. Additionally, TD Cowen analyst Tom Fitzgerald also increased the price target to $10.00, maintaining a Hold rating while acknowledging the company’s cautious approach to utilization and revenue strategy.
Citi analyst Stephen Trent (NSE:TREN) resumed coverage on Frontier Group with a Neutral rating and a price target of $7.25, noting the airline’s improved operational performance and positive free cash flow. However, he highlighted concerns about the reliance on tax credits and potential challenges from tariffs and rising labor costs. In corporate developments, Frontier announced that Chief Accounting Officer Josh Wetzel will resign effective May 30, 2025, with no successor named yet. This transition occurs as the company navigates a competitive industry landscape.
The airline’s forward guidance for 2025 includes expectations of at least $1.00 in EPS, driven by strategic initiatives such as capacity optimization and loyalty program enhancements. These recent developments reflect Frontier Group’s strategic efforts to enhance financial performance and operational efficiency amidst industry challenges.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.