Market Overview

Imperial Capital Turns Bullish On Alaska Air

Share:
Imperial Capital Turns Bullish On Alaska Air

The bullish case for Alaska Air Group, Inc. (NYSE: ALK), a U.S.-based airliner that flies to more than 115 destinations across the U.S., Mexico, Canada and Costa Rica, can now be made, according to Imperial Capital.

The Analyst

Imperial Capital's Michael Derchin upgraded Alaska Air from In-Line to Outperform with a price target lifted from $62 to $95.

The Thesis

Alaska Air's stock should trade at a premium valuation versus the airline group for several reasons, Derchin said in a note. These include:

  • Capacity growth should moderate in the fourth quarter of 2018 and grow by 2 percent in 2019 due to the company's flexibility to restrain capacity below the 4 to 8 percent historical range.
  • Comparisons should ease year-over-year in legacy Virgin America markets after competitive issues in 2017 and 2018, especially within California and transcontinental.
  • Notable significant merger synergies should start in 2019 after the "heavy lifting" component of the Virgin America acquisition is complete.
  • The "Saver Fare" discount ticket promotion should start showing benefits in the near-term.
  • The fast growing loyalty program and expectations for baggage fee increases should result in higher ancillary revenues.
  • Better than expected close-in fares has already resulted in management lifting its third-quarter revenue per available seat mile guidance.
  • West Coast to Hawaii fares are already adjusting to preempt rival Southwest Airlines Co (NYSE: LUV) entering the market next year.

Price Action

Shares of Alaska Air Group were trading higher by more than 3.5 percent to $69.49 at time of publication.

Related Links:

Transportation ETFs Try To Regain Lost Momentum

Macquarie Cites Valuation Concerns In United Continental Downgrade

Latest Ratings for ALK

DateFirmActionFromTo
Oct 2019MaintainsOverweight
Oct 2019MaintainsOverweight
Aug 2019MaintainsIn-Line

View More Analyst Ratings for ALK
View the Latest Analyst Ratings

Posted-In: airline Airliners imperial capital Michael DerchinAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (ALK + LUV)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
FTVMorgan StanleyMaintains70.0
ROKMorgan StanleyMaintains142.0
WWEFBN SecuritiesUpgrades100.0
SWNCapital One FinancialUpgrades
AEISCowen & Co.Downgrades57.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Mid-Afternoon Market Update: Bed Bath & Beyond Drops Following Weak Q2 Results; Cameco Shares Surge

BlackBerry Q2 Earnings Preview