Tuesday, Wolfe Research upgraded Sun Country Airlines Holdings (NASDAQ:SNCY) shares from Peer Perform to Outperform with a price target of $14.00. The firm highlighted the airline's performance, noting that despite being the worst-performing airline stock in their coverage, excluding Spirit Airlines (NYSE:SAVE), Sun Country has maintained higher-end margins within the industry.
The analyst pointed out that after the stock's underperformance this year, Sun Country's valuation and robust free cash flow present an increasingly attractive investment opportunity. The upgrade reflects an anticipation of accretive mix changes in the coming year that are expected to positively impact the airline's financial position.
Sun Country Airlines has drawn attention for its ability to sustain strong margins amidst a challenging year for the airline sector. The upgrade to Outperform suggests confidence in the airline's future prospects and financial health.
The new price target of $14.00 indicates Wolfe Research's expectation for Sun Country's stock value to rise from its current level. This adjustment comes in the wake of the airline's underperformance this year, which the research firm now sees as an opportune entry point for investors.
Investors in Sun Country Airlines Holdings will be watching closely to see if the airline can capitalize on the positive outlook and mix changes projected for the next year, potentially leading to a turnaround in its stock performance as suggested by Wolfe Research's upgrade.
In other recent news, Sun Country Airlines has experienced several noteworthy developments. The airline recently reported a 2.6% decline in total revenue for the second quarter of 2024, despite seeing growth in charter and cargo revenues. In the same quarter, Sun Country announced adjusted earnings per share (EPS) of $0.06, surpassing analyst expectations. However, the company's guidance for the third quarter fell below market estimates.
TD Cowen has reaffirmed its Buy rating on Sun Country, maintaining a steady price target of $20.00. The firm anticipates the airline will generate significant free cash flow over the next two years and predicts that by 2026, cargo operations will account for approximately 20% of Sun Country's revenue.
On the other hand, Susquehanna adjusted its price target for Sun Country from $13.00 to $11.00, while still maintaining a Neutral rating on the stock. The firm anticipates improved earnings in the second half of 2024 and for the full year of 2025, citing slightly better operating margins due to lower fuel costs and depreciation and amortization expenses. These are some of the recent developments for Sun Country Airlines.
InvestingPro Insights
Recent InvestingPro data aligns with Wolfe Research's upgrade of Sun Country Airlines (NASDAQ:SNCY). Despite the stock's significant decline over the past six months, with a 32.95% drop in price total return, the company maintains a relatively low P/E ratio of 10.62. This valuation metric supports Wolfe Research's view that the stock may be undervalued after its recent underperformance.
InvestingPro Tips highlight that management has been aggressively buying back shares, indicating confidence in the company's future prospects. This aligns with the analyst's expectation of accretive mix changes in the coming year. Additionally, the company's profitability over the last twelve months, with a revenue of $1.06 billion and an operating income margin of 9.78%, supports the analyst's observation about Sun Country maintaining higher-end margins within the industry.
It's worth noting that InvestingPro offers 8 additional tips for Sun Country Airlines, providing investors with a more comprehensive analysis of the company's financial health and market position. These insights can be particularly valuable given the volatile nature of airline stocks and the specific challenges faced by Sun Country this year.
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