Seaport Global initiated coverage of seven airliners, three of which should be bought by investors.
Daniel McKenzie initiated coverage of the following airliners:
- Alaska Air Group, Inc. (NYSE: ALK) at Buy, $53 price target.
- Allegiant Travel Company (NASDAQ: ALGT) at Buy, $166 price target.
- Azul SA (NYSE: AZUL) at Neutral, no price target.
- Copa Holdings, S.A. (NYSE: CPA) at Neutral, no price target.
- Delta Air Lines, Inc. (NYSE: DAL) at Buy, $43 price target.
- Gol Linhas Aereas Inteligentes SA (NYSE: GOL) at Neutral, no price target.
- Hawaiian Holdings, Inc. (NASDAQ: HA) at Neutral, no price target.
Airliners will be in a position to start their “balance sheet repair” initiatives but a more material recovery hinges on the success of a coronavirus vaccine, the analyst wrote.
Bullish Ratings
Beyond 2021, the company can leverage its new alliance with OneWorld, share gains at key hubs, and a new basic economy product to show a strong financial recovery.
Delta controls a 70% or greater market share at four of its five hubs and this gives it a structural revenue advantage over its peers, the analyst wrote. The company ended the second quarter with around $16 billion in liquidity and this implies it’s in “better shape” versus current investor sentiment.
Neutral Ratings
But investors should hold a cautious stance ahead of a potential capital raise that would be costly and create equity dilution.
In the meantime, signs of a more visible demand recovery in the region are needed before turning bullish on Copa.
The company faces near-term concerns, including reports of a capital raise and a sigma of operating in a “bad neighborhood.”
Mounting Debt To Shackle Airlines’ Pandemic Recovery” data-reactid=”50″>Mounting Debt To Shackle Airlines’ Pandemic Recovery
Airlines Highlight Hygiene Efforts To Win Back Customers” data-reactid=”51″>Airlines Highlight Hygiene Efforts To Win Back Customers
View Article Origin Here
