UPDATE: Wolfe Research Upgrades Alaska Air (ALK) to Outperform
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Wolfe Research analyst Hunter Keay upgraded Alaska Air (NYSE: ALK) from Peerperform to Outperform, PT $78.00.
The analyst comments "Maybe investors are worried about LUV’s competitive ambitions out west or maybe ALK’s west coast orientation (slower re-opening, less Florida) has hurt. ALK’s capex burden next year is no joke, at $1.5B, which will preclude FCF generation. But frankly we view that as a good thing because (1) they can afford it, (2) it drives real durable P&L benefit as they replace A320s, and (3) they aren’t kicking the capex can, as many others have done and will do next year, too. ALK will be fine. Like DAL, our model changes drive our upgrade today as we use the same valuation framework to value the stock and derive our target price of $78: 10x P/E, 20x EV/FCF (normalized), and 7x EV/EBITDAR on 2024 estimates discounted back at 7.5%."
Shares of Alaska Air closed at $62.64 yesterday.
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