Helane Becker, an analyst from TD Cowen, maintained the Buy rating on Alaska Air (ALK – Research Report). The associated price target is $40.00.
Helane Becker’s Buy rating for Alaska Air (ALK) reflects her assessment of the airline’s prospects despite near-term headwinds. She acknowledges the financial impact of the MAX9 fleet grounding on the fiscal year 2023 results, which is expected to create a $150 million challenge, particularly in terms of revenue. However, Becker is optimistic that Alaska Air will receive adequate compensation from Boeing, even though current guidance does not factor in any such estimates. In addition, she notes the company’s conservative capacity growth estimate, which is at or below a 3% year-over-year increase, indicating a cautious but stable approach to expansion.
In updating her model and adjusting the price target to $40 from $45, Becker takes into account both the actual financial results of the fourth quarter and the full year of 2023, as well as Alaska Air’s latest outlook for 2024. Her analysis includes the application of a 4.0x multiple to the 2025 expected EV/EBITDAR, which supports her valuation. Despite the lowered price target, Becker maintains an Outperform rating. She recognizes that the ongoing uncertainty stemming from the MAX9 situation and potential investor concerns regarding the proposed acquisition of Hawaiian Airlines may continue to affect the stock’s performance. Nevertheless, Becker’s outlook suggests confidence in the airline’s ability to navigate these challenges and deliver value to shareholders.
In another report released today, Bank of America Securities also reiterated a Buy rating on the stock with a $50.00 price target.
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Alaska Air (ALK) Company Description:
Alaska Air Group, Inc. is a holding company, which through its subsidiaries, Alaska Airlines, Inc. and Horizon Air Industries, Inc., engages in the provision of air transportation services. It operates through three segments: Alaska Mainline, Alaska Regional and Horizon. The Alaska Mainline segment includes flying Boeing 737 jets and all associated revenues and costs. The Alaska Regional segment records actual on-board passenger revenue, less costs such as fuel, distribution costs, and payments made to Horizon, SkyWest and PenAir under the respective Capacity Purchase Agreements. The Horizon segment operates turboprop Q400 aircraft. The company was founded in 1985 and is headquartered in Seattle, WA.
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