On Wednesday, Morgan Stanley reiterated its Equalweight rating on Singapore Airlines (OTC:SINGY) Ltd. (SIA:SP) (OTC: SINGF (OTC:SINGF)), with a steady price target of SGD7.30. The firm anticipates that the airline's share price may experience a decline relative to the country index over the next 15 days. This outlook follows Singapore Airlines' recent stock performance, which saw a 13% increase over the past month, outpacing the Straits Times Index's (STI) 3% rise, driven by robust passenger demand and load factors.
Singapore Airlines reported its third-quarter fiscal year 2024 results, which showed revenue figures aligning with Morgan Stanley's estimates (MSe). However, the operating profit for the quarter fell short of expectations due to increased operating expenses. Consequently, the operating profit margin (OPM) decreased from 17% in the first half of fiscal year 2024 to 12% in the third quarter.
The firm has expressed concerns regarding the potential downside risk to the market's implied earnings before interest and taxes (EBIT) for the airline's fourth-quarter fiscal year 2024. The recent gains in Singapore Airlines' stock may be vulnerable to reversal as investors digest the implications of the third-quarter results. The analysis suggests a "very likely" probability, estimated between 70% to 80%, that the airline's stock could give up some of its recent gains following the earnings report.
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