Allegiant Travel shares climbed 2.8% in pre-market trading on Tuesday after Raymond James upgraded the stock to Strong Buy from Outperform, citing margin recovery potential and a flexible capacity model.
The airline’s shares had been trading near multi-month lows prior to the move, according to the firm. Raymond James maintained a price target of $116, down from its prior target of $138, while emphasizing that the recent quarter-to-date decline in the stock had exceeded any deterioration in the underlying business.
The upgrade follows a separate rating change by Zacks Research, which moved Allegiant Travel to Strong Buy on August 19. Raymond James highlighted several factors supporting its upgraded view, including the potential for margin recovery, the company’s flexible capacity model, and the enhanced scale achieved through the acquisition of Sun Country Airlines, which closed in May.
The broader market showed mixed performance in pre-market trading, with the S&P 500 slipping 0.2% and the Nasdaq declining 0.6%. The article noted no specific catalyst from competing leisure airlines, such as Southwest or Frontier, which have been vying for market share on former Spirit Airlines routes.
Allegiant Travel operates as a leisure-focused airline, serving primarily vacation destinations with a point-to-point network model.
