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Investing.com - UBS maintained its Neutral rating and $49.00 price target on Alaska Air (NYSE:ALK) ahead of the carrier’s upcoming earnings report on July 23. According to InvestingPro data, the stock appears undervalued despite trading at a P/E of 18.08, with a notably low PEG ratio of 0.37 indicating attractive growth prospects relative to its current valuation.
The investment bank noted that recent positive commentary from Delta Air Lines (NYSE:DAL) and United Airlines about improving demand trends has likely raised expectations for Alaska Air’s third-quarter and full-year guidance. InvestingPro analysis reveals that 6 analysts have recently revised their earnings expectations downward, while the company is forecasting strong revenue growth of 21% for the fiscal year.
UBS analyst Atul (NSE:ATLP) Maheswari pointed out that Alaska Air shares have risen approximately 6% since Delta reported its second-quarter results on July 10, compared to gains of about 10% for Delta and 15% for United.
The broader airline sector, as measured by the Jets Index, has increased roughly 5% during the same period, according to UBS.
The firm suggested that the recent stock price appreciation, combined with positive signals from industry peers, has elevated the performance bar for Alaska Air’s forward guidance.
In other recent news, Alaska Airlines experienced significant disruptions after an unexpected IT outage led to a temporary grounding of its entire fleet. The airline canceled 7% of its flights on Monday, totaling more than 150 cancellations since Sunday evening. Operations resumed after a three-hour halt, as the airline addressed a critical hardware failure in its data centers. Meanwhile, UBS has initiated coverage on Alaska Air with a Neutral rating and set a price target of $49. UBS anticipates that Alaska Air’s second-quarter results will align with guidance, despite a projected 1.0% decline in revenue per available seat mile. In related aviation industry developments, Republic Airways CEO Bryan Bedford has been confirmed as the new head of the Federal Aviation Administration. Bedford will oversee the implementation of $12.5 billion in funding aimed at modernizing the U.S. air traffic control system. Additionally, aircraft startup JetZero plans to invest $4.7 billion in North Carolina to establish a production facility and headquarters, creating over 14,000 jobs in the coming years.
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