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."
Invest in Gold
Thor Metals Group: Best Overall Gold IRA
Learn More
Priority Gold: Up to $15k in Free Silver + Zero Account Fees on Qualifying Purchase
Learn More
American Hartford Gold: #1 Precious Metals Dealer in the Nation
Learn More Powered by Money.com - Yahoo may earn commission from the links above.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.
Related articles
UBS previews airline Q2 earnings, starts JetBlue at sell
Citi adds Applied Materials to focus list on valuation gap with peers
Wall Street initiates Chime coverage: What analysts are saying after June debut
