On Thursday, Evercore ISI sustained a positive outlook on Alaska Air Group Inc. (NYSE:ALK), reiterating an Outperform rating with a consistent price target of $65.00. The firm recognized the airline's constructive forward outlook, noting its recovery from the operational challenges faced in the first quarter due to the grounding of the MAX 9 aircraft.
Alaska Air has provided second-quarter earnings per share (EPS) guidance that surpasses the consensus estimates and has modestly increased its forecast for the full year. This outlook includes the $0.95 per share impact from the MAX 9 grounding in the March quarter.
Moreover, the company has adjusted its full-year capacity growth forecast to less than 3%, a decrease from the initial projection of 3-5%.
The airline's managed corporate revenue showed a significant increase, with a 22% year-over-year rise, attributed evenly to volume and yield improvements. Notably, revenue from corporate clients in the technology sector surged by 50% compared to the previous year, reaching 85% of 2019 levels. Revenue from professional services also saw a 20% year-over-year increase.
The analyst pointed out that competitive capacity trends are expected to improve sequentially in the second quarter compared to the first, which could further benefit Alaska Air's performance.
InvestingPro Insights
Evercore ISI's positive stance on Alaska Air Group Inc. is supported by several encouraging metrics and InvestingPro Tips. Notably, the airline is projected to have a profitable year, with net income expected to grow.
This aligns with the company's second-quarter EPS guidance that exceeds consensus estimates. Moreover, 8 analysts have recently revised their earnings expectations upwards for the upcoming period, reflecting confidence in the company's financial outlook.
InvestingPro Data shows a robust revenue growth of 8.09% over the last twelve months as of Q4 2023, with a gross profit margin of 23.62%. These figures suggest a solid operational performance that backs the company's optimistic guidance.
Alaska Air has demonstrated a strong return over the last three months, with a price total return of 22.2%, and an even more impressive uptick of 30.8% over the last six months. This price performance is a testament to the company's resilience and potential for growth, despite not offering dividends to shareholders.
For readers interested in more detailed analysis and additional InvestingPro Tips, there are 9 more tips available that could provide further insights into Alaska Air Group's potential. To access these, visit https://www.investing.com/pro/ALK and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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