Raymond James upgraded Allegiant Travel Company (NASDAQ: ALGT) to Strong Buy from Outperform, citing expectations of margin recovery, labor agreement benefits and synergies from the Sun Country acquisition.
The brokerage reduced its price target to $116 from $138, based on approximately 11 times its 2027 earnings per share estimate. The multiple compares with 12 times applied to high-quality airlines and a historical pre-COVID range of 4 to 7 times for U.S. airlines. The target implies an enterprise value to EBITDAR multiple of 6.5 times based on 2027 estimates and 8.8 times for 2026.
Allegiant’s stock was trading at $81.85 at the time of the report, down 4% year-to-date but up 35% over the past 12 months. The company’s debt-to-equity ratio stands at 1.6, reflecting significant leverage.
Analysts project 2026 earnings per share of $5.66, with second-quarter 2026 results showing $2.19 per share, exceeding expectations for a loss of $0.31 per share. Revenue for the quarter reached $943.5 million, below the $978.38 million forecast, while operating margin hit 9.2%, the highest among U.S. airlines during the period.
A new labor agreement approved by Allegiant Air pilots, supported by 80% of voting members, includes a 40% wage increase and $300 million in retention bonuses, with total wage growth reaching 54% by January 2027. Raymond James highlighted margin recovery mechanisms, a flexible capacity model and scale gains from the Sun Country acquisition as key drivers, while flagging risks such as high fuel costs and execution challenges in integration.
