On Wednesday, Susquehanna adjusted its outlook on Hawaiian Holdings (NASDAQ:HA), lowering the price target from $15.00 to $14.00 while maintaining a Neutral rating on the company's stock. The revision comes in light of a sluggish rebound in travel demand from Japan and Maui, which has implications for the airline's financial performance.
The firm noted that Hawaiian Holdings' first-quarter earnings fell short of expectations, with an adjusted EPS of -$2.77, which is below the anticipated -$2.75 and the consensus of -$2.74. Despite a stronger operating performance, the results were impacted by weaker financials below the line. This discrepancy was the primary driver behind the minor outperformance relative to Susquehanna's projections.
The analyst from Susquehanna highlighted that for Hawaiian Holdings to navigate the current challenges, routes from the US to the mainland, US point-of-sale (PoS) outbound international, and inter-island services would need to compensate for the slower recovery in the airline's traditionally strong markets.
The expectation is for some margin improvement in the second half of 2024, as the company starts to benefit from the introduction of the Boeing (NYSE:BA) 787 and its emerging partnership with Amazon (NASDAQ:AMZN) for cargo services. These strategic moves are anticipated to offer some relief to the margins that have been pressured by the slower recovery in key international markets.
Hawaiian Holdings' current financial results and prospects reflect the dynamic nature of the airline industry, which is influenced by various factors including international travel demand and fleet efficiency. The company's ability to adapt to these market conditions will be crucial for its financial stability moving forward.
InvestingPro Insights
As Hawaiian Holdings (NASDAQ:HA) navigates through a challenging period in the travel industry, insights from InvestingPro provide a deeper understanding of the company's financial health and market position. With a market capitalization of $668.85 million, Hawaiian Holdings operates with a significant debt burden, which may pose difficulties in making interest payments on debt, as noted in one of the InvestingPro Tips. This is particularly relevant given the company's adjusted P/E ratio for the last twelve months as of Q1 2024 standing at -2.11, indicating that investors are concerned about its profitability.
Despite a quarterly revenue growth of 5.38% in Q1 2024, the company's gross profit margin remains low at 3.71%, underscoring the concerns raised by Susquehanna regarding financial performance. This aligns with another InvestingPro Tip highlighting weak gross profit margins. Furthermore, the stock has experienced a large price uptick over the last six months, with a 200% return, yet it is trading at a high Price / Book multiple of -16.63. This could suggest that the stock's recent performance may not be sustainable in the long term, especially if profitability remains elusive.
For investors interested in a comprehensive analysis, there are additional InvestingPro Tips available, which could provide further guidance on whether Hawaiian Holdings is a prudent investment choice. To explore these insights and more, consider using the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. Remember, these metrics and tips are crucial for making informed decisions in today's volatile market.
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