On Wednesday, Jefferies maintained a Buy rating on Cathay Pacific Airways (OTC:CPCAY) Ltd. shares (293:HK) (OTC: CPCAY) but lowered the price target from HK$10.50 to HK$9.80. The firm highlighted that the airline's operations are proceeding as expected, in line with the management's statements during the results announcement in March 2023.
The passenger yields are reported to be 10% lower, which is better than Jefferies' full-year estimate, with the UK and North America routes performing stronger due to reduced competition, as opposed to routes in Asia.
The airline's hiring process is on track, which is pivotal for their goal to reach 100% passenger flight operations by the first quarter of 2025. Jefferies' analyst pointed out that Cathay Pacific's current stock value is trading below book value, which supports the decision to maintain a Buy rating despite the reduction in the price target.
Cathay Pacific's management has reiterated that passenger yields have remained consistent, and the airline is experiencing stronger performance on routes to the UK and North America. This is attributed to less competitive pressures compared to its Asian routes, which are not performing as strongly.
The airline's strategic focus on hiring aligns with its operational targets, aiming to fully restore passenger flight operations to pre-pandemic levels by early 2025. This move is critical for Cathay Pacific's recovery and growth strategy following the impact of global travel restrictions.
In summary, while the stock price target for Cathay Pacific has been slightly lowered, Jefferies affirms its confidence in the airline's recovery trajectory and operational targets, underpinning the decision to maintain a Buy rating on the stock.
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