Bank of America Downgrades Allegiant Travel Stock to Negative Outlook
May 3, 2023
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Allegiant Travel ($NASDAQ:ALGT), a low-cost American airline, has had its stock recently downgraded from Neutral to Negative by Bank of America Merrill Lynch. This has caused the share price of Allegiant Travel to decrease significantly, resulting in a loss of investor confidence. The downgrade follows a series of rough quarters in which Allegiant Travel reported lower than expected financial results. In particular, the company has been struggling to cope with the rising costs associated with fuel and labor, which have contributed to decreasing profits and higher expenses.
The airline has also been facing other operational challenges recently, such as flight delays and poor customer service, which have taken a toll on the company’s reputation. The new negative outlook by Bank of America Merrill Lynch is a sign of the airline sector’s struggles, and a reminder that Allegiant Travel must work to improve its operational efficiency and customer service in order to remain competitive in the industry. Investors will be closely watching the company’s progress and performance in the coming quarters to see if the recent downgrades are warranted.
Stock Price
This caused the stock to open at $99.6 and close at $98.0, representing a drop of 5.7% from its last closing price of 103.9. This decline in share price could lead to further losses for the company, and could signal that ALLEGIANT TRAVEL is facing a difficult period ahead. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Allegiant Travel. More…
| Total Revenues | Net Income | Net Margin |
| 2.3k | 2.46 | 1.0% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Allegiant Travel. More…
| Operations | Investing | Financing |
| 303.05 | -491.42 | 33.12 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Allegiant Travel. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 4.51k | 3.29k | 67.34 |
Key Ratios Snapshot
Some of the financial key ratios for Allegiant Travel are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 7.7% | -29.7% | 4.7% |
| FCF Margin | ROE | ROA |
| -5.7% | 5.6% | 1.5% |
Analysis
At GoodWhale, we recently conducted an analysis of ALLEGIANT TRAVEL‘s wellbeing. According to our Star Chart, the company is strong in asset, growth, and profitability, and weak in dividend. As a result, we classify ALLEGIANT TRAVEL as a ‘rhino’ – a type of company we conclude has achieved moderate revenue or earnings growth. We believe that these results make ALLEGIANT TRAVEL attractive to investors who are looking for moderate growth. Additionally, our analysis also indicates that ALLEGIANT TRAVEL has an intermediate health score of 6/10 considering its cashflows and debt, meaning that the company is likely to safely ride out any crisis without the risk of bankruptcy. This is another point in ALLEGIANT TRAVEL’s favor, making it an attractive investment opportunity for those seeking reliable returns. More…
Peers
The competition among Allegiant Travel Co, Korean Air Lines Co Ltd, Cebu Air Inc, and InterGlobe Aviation Ltd is fierce. All four companies are striving to provide the best possible service to their customers. Each company has its own strengths and weaknesses, and it is up to the customer to decide which airline best meets their needs.
– Korean Air Lines Co Ltd ($KOSE:003490)
Korean Air Lines Co Ltd is a major airline company headquartered in Seoul, South Korea. It is the flag carrier of South Korea and operates a fleet of over 150 aircraft. The company has a market cap of 7.89T as of 2022 and a Return on Equity of 20.57%. Korean Air Lines is one of the world’s largest airlines and is a member of the SkyTeam alliance. The company offers a wide array of domestic and international flight routes and provides a high level of customer service.
– Cebu Air Inc ($PSE:CEB)
Cebu Air Inc is a leading low-cost carrier in the Philippines. It has a strong presence in the domestic market and offers services to over 60 destinations across the country. The company has a market cap of 22.34B as of 2022 and a Return on Equity of -580.13%. Cebu Air is committed to providing affordable, convenient, and reliable air travel services to its customers. It has a modern fleet of aircraft and a strong network of domestic and international routes. The company is continuously expanding its operations and has plans to further grow its market share in the coming years.
– InterGlobe Aviation Ltd ($BSE:539448)
InterGlobe Aviation Ltd, the owner of India’s largest airline by market share, IndiGo, has a market cap of 672.27B as of 2022. The company has a strong financial performance, with a return on equity of 16.73%. IndiGo is a low-cost carrier that offers affordable air travel to passengers in India and across the world. The company has a fleet of over 250 aircraft and operates more than 1,200 flights daily. InterGlobe Aviation is a publicly traded company listed on the Bombay Stock Exchange and the National Stock Exchange of India.
Summary
The company has recently been the subject of an investment analysis from Bank of America, which issued a bear rating on the company’s stock. This caused the stock price to drop significantly the same day. Investors should be aware of the risks associated with investing in Allegiant Travel, as the bear rating indicates that the stock is expected to decrease in value in the near future. It is important to understand the company’s financials and current market conditions before investing.
Additionally, it is also important to diversify investments in order to spread risk and reduce potential losses.
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