Bullish indicating open at $55-$60, IPO prices at $37
Investing.com -- On Monday, UBS assumed coverage on several U.S. airline stocks with a cautious tone, initiating JetBlue Airways (NASDAQ:JBLU) with a Sell rating and flagging a challenging path to profitability in the near term.
While JetBlue may post better-than-expected second-quarter results, UBS warned that "we see downside risk to 3Q and FY’25 estimates."
Analysts cited limited revenue momentum and persistent cost pressures, forecasting a 3Q EPS of -$0.48 versus consensus at -$0.47. "To achieve profits next year, JBLU would need a meaningful acceleration in its revenue metrics," UBS noted. Its $3 price target implies roughly 9x 2026 EBITDAR.
Allegiant Travel (NASDAQ:ALGT) was initiated with a Neutral rating. UBS expects the company to meet subdued Q2 expectations, projecting EPS of $0.74 versus consensus at $0.78, and believes “bookings have likely remained solid, but at lower yields.”
For FY25, UBS forecasts EPS of $3.37, ahead of consensus at $2.79, but emphasized that further earnings revisions would be required for the stock to move higher.
Frontier was also assumed at Neutral, with UBS forecasting a Q2 EPS loss of $0.28 and a full-year loss of $0.33. “ULCC will need to provide evidence of a strong improvement in 3Q RASM growth YoY” to convince investors of a second-half profit recovery.
Alaska Air (NYSE:ALK) similarly received a Neutral rating, with UBS expecting in-line Q2 earnings and a FY25 EPS estimate of $3.26, slightly below consensus. “Demand backdrop is uncertain and competitive capacity pressures remain,” UBS cautioned.
“While much remains unknown about 4Q, we think industry capacity remaining benign is highly likely. This should be supportive of industry RASMs,” concluded the bank.