On Wednesday, TD Cowen expressed confidence in Alaska Air Group, Inc. (NYSE: NYSE:ALK), citing several positive factors that could bolster the company's financial performance. The firm raised its price target on the airline's stock from $50.00 to $68.00 while maintaining a Buy rating. The stock, which has delivered a remarkable 54.2% return over the past year, is currently trading near its 52-week high of $54.14. According to InvestingPro analysis, Alaska Air appears fairly valued at current levels.
Alaska Air is slated to host an investor day in New York City on December 10, where it is anticipated that the company will provide guidance for FY25 earnings per share (EPS) along with insights into its strategy following its recent merger. With current market capitalization of $6.83 billion and EBITDA of $1.31 billion, InvestingPro data shows the company maintains strong financial metrics. The analyst anticipates that Alaska Air will share updates on the post-merger strategy and potential synergies that may arise from the integration of the two airlines.
The analyst highlighted that both airlines, pre-merger, were experiencing positive momentum that is expected to continue into 2025, even before accounting for any merger synergies. The initial guidance on synergies was deemed conservative, suggesting there might be room for an upward revision.
Furthermore, the discussion at the investor day is likely to cover Alaska Air's deleveraging process and capital allocation strategies. The airline is perceived to have a balance sheet advantage over its competitors in the post-pandemic landscape, which could provide a strategic edge.
The company's near-term focus is on maintaining control, enhancing productivity, and executing operations effectively. As the competitive environment returns to normalcy, Alaska Air is positioned to capitalize on opportunities that arise. With analyst targets ranging from $45 to $80 per share, investors seeking deeper insights can access comprehensive analysis and additional ProTips through InvestingPro's detailed research reports.
In light of these factors, TD Cowen has increased its estimates for the airline and reaffirms its Buy rating, setting the price target at approximately 13 times the projected 2025 earnings per share.
In other recent news, Alaska Air Group reported robust third-quarter earnings, with a GAAP net income of $220 million and an adjusted net income of $327 million.
The airline's recent merger with Hawaiian Airlines is expected to dilute Alaska's earnings by 22% in 2025, but analysts at Melius Research have expressed confidence in the potential for management to enhance Hawaiian's fundamentals. To manage the financial impact of the merger, Alaska Air launched a $1.5 billion financing initiative backed by its customer loyalty program and issued $1.25 billion in senior secured notes.
UBS has initiated coverage on Alaska Air, assigning a Buy rating and a $72.00 price target, expecting solid revenue growth for the airline. Goldman Sachs also resumed coverage on Alaska Air, issuing a Buy rating and setting a price target of $70.00. However, TD Cowen reduced its price target to $50 but maintained a Buy rating.
In leadership changes, Alaska Airlines announced the promotion of five executives to key roles, following the acquisition of Hawaiian Airlines. These promotions aim to support the airline's commitment to growth and enhance its travel experience for customers. `
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