Why Analysts Have Turned Positive on Alaska Air Group



Analysts’ views

According to a Reuters consensus, of the 13 analysts tracking Alaska Air Group (ALK) stock, 76.9% (ten analysts) have “buy” or similar recommendations on the stock, compared to the earlier 69.2%.

Of these ten, 30.8% (four analysts) have “strong buy” recommendations, while 46.2% (six analysts) have a “buy” recommendations. The remaining 23.1% of analysts (three analysts) have “hold” recommendations on the stock, and none have “sell” recommendations.

Most analysts have maintained their recommendations following Alaska Air’s 4Q16 results. Stifel has upgraded the stock to a “buy” rating from a “hold” rating. JPMorgan Chase has maintained an “overweight” rating, and Morgan Stanley has cut its rating to “in line” from a “buy.”

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Target price

Alaska Air’s consensus 12-month target price is $110.7, indicating a 28.2% return potential as of its April 13, 2017, closing price of $86.3. This target price is higher than ALK’s targets of $99.8 following its 4Q16 results and $80.55 following its 3Q16 results.

Companies that have increased their target prices on Alaska Air include JPMorgan Chase, which has raised its target to $116 from $93.5. Cowen Group has also raised its target price to $102 from $100, and Stifel has raised its target price to $145 from $105.

Imperial Capital, on the other hand, has reduced its target price to $98 from $101. Morgan Stanley has cut its target price from $113 to $109. Currently, Alaska Air has a high price target of $145 and a low price target of $98.

Investors can gain exposure to airlines through the iShares Transportation Average ETF (IYT). IYT holds 5.4% in Alaska Air, 4.7% in United Continental (UAL), 4.3% in Delta Air Lines (DAL), 3.9% in Southwest Airlines (LUV), 3.6% in American Airlines (AAL), and 1.9% in JetBlue Airways (JBLU).

In the next few articles, we’ll discuss what led to ALK’s recommendations, helping investors to judge whether analysts are being optimistic or conservative about the stock. We’ll also help you to understand what may be priced in to the stock.


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