Susquehanna cuts airlines price targets as 'things could get worse before they get better'

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Susquehanna cuts airlines price targets as 'things could get worse before they get better'
Credit: © Reuters.

Susquehanna analysts cut the price target for various airline stocks Wednesday, stating that "getting back to normal doesn't look so good."

The analysts told investors in a note that with its airline coverage down fully ~35% since early July, the view is "a bottom is here (or close) would seem reasonable."

However, "with FY24 consensus estimates for capacity still aspirational, we believe things could get worse before they get better, with holiday travel, fuel, and the geopolitical landscape all key items to watch into YE23," the analysts wrote.

Here are the price target changes:

  • American Airlines (NASDAQ: AAL ) to $13 from $19
  • Allegiant Travel Company (NASDAQ: ALGT ) to $80 from $120
  • Alaska Air Group (NYSE: ALK ) to $41 from $58
  • Delta Air Lines (NYSE: DAL ) to $44 from $60
  • Hawaiian Holdings (NASDAQ: HA ) to $5 from $11
  • JetBlue Airways (NASDAQ: JBLU ) to $5 from $7
  • Southwest Airlines (NYSE: LUV ) to $25 from $30
  • Spirit Airlines (NYSE: SAVE ) to $15 from $17
  • Sun Country Airlines Holdings Inc (NASDAQ: SNCY ) to $18 from $23
  • United Airlines Holdings Inc (NASDAQ: UAL ) to $44 from $57
  • Frontier Group Holdings Inc (NASDAQ: ULCC ) to $5 from $9

"With DAL kicking off 3Q earnings season for the airlines this Thursday, sentiment for the group is among the most negative we have seen in some time, contrasting the 'will they survive' viewpoint during the depths of the pandemic with 'how low can 2024 earnings' go," the analysts added. "We are maintaining our Positive views on DAL, ALK and SNCY, given our belief they are best positioned within their respective operating groups."

Even so, Susquehanna believes near-term, up/downside risk is likely skewed to the latter or at least until consensus reflects what they believe will be lower capacity for FY24.

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