- Raymond James analyst Savanthi Syth lowered the price target on Azul SA AZUL to $12 (an upside of 83%) from $22 while maintaining the Outperform rating on the shares.
- The analyst updated earnings estimates to reflect a higher fuel price forecast, including elevated refining margins, and a weaker BRL relative to the USD, partly offset by strong demand and yields.
- Syth believes the current share price offers an attractive risk-reward point, supported by Azul’s differentiated network, unique cargo opportunity, and potential to meaningfully increase its presence at the profitable Sao Paulo-Congonhas (CGH) airport.
- CGH is expanding the number of slots by ~30% over a ~2 year period. While Gol Linhas Aereas Inteligentes S.A. GOL and LATAM Airlines Group S.A. LTMAQ are likely to continue to dominate the airport, Azul is likely to double its exposure, the analyst noted.
- Syth mentioned that Azul believes it could generate more profits on a per-route basis than GOL or LATAM due to its smaller-gauge aircraft being better suited for most of the markets served.
- Syth reiterated the Market Perform rating on GOL and saw better risk-reward at AZUL.
- Recently, Barclays analyst Pablo Monsivais downgraded Azul to Underweight from Equal-Weight and lowered the price target to $7 (an upside of 6.7%), from $17.
- Price Action: AZUL shares are trading higher by 2.90% at $6.56 on the last check Thursday.
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