On Friday, TD (TSX:TD) Cowen updated its outlook on Alaska Air Group Inc (NYSE: NYSE:ALK), raising the stock's price target to $49.00 from the previous $41.00, while maintaining a Buy rating. The revision follows Alaska Air's recent regulatory filing, which disclosed a $160 million compensation from Boeing (NYSE:BA) due to an incident involving a MAX aircraft on January 5.
The compensation is linked to an event earlier this year when a MAX aircraft was grounded for several weeks. According to the airline's 8K filing, this financial compensation from Boeing will not be recorded in the income statement. Instead, it will be reflected in the cash flow statement, providing a cash boost without affecting reported earnings.
The firm emphasized the positive impact on Alaska Air's financials, noting that earnings from operations are showing better performance than initially expected. This development has contributed to the firm's decision to raise the price target for Alaska Air's shares.
The airline's operational earnings have gained attention as a key metric for financial health, particularly in the context of the recent incident and subsequent compensation. The focus on these earnings underscores the importance of operational performance in the assessment of the airline's financial position.
InvestingPro Insights
With Alaska Air Group Inc's (NYSE: ALK) recent compensation from Boeing bolstering its financial outlook, key metrics from InvestingPro further illuminate the company's current standing. The market capitalization stands at a solid $5.25 billion, indicating a robust market presence. An adjusted price-to-earnings (P/E) ratio over the last twelve months of 9.14 suggests that the stock may be undervalued relative to its earnings. This is further supported by a PEG ratio of just 0.07, highlighting potential growth at a lower price. Additionally, Alaska Air has demonstrated a healthy gross profit margin of 23.62%, which is a positive indicator of its operational efficiency.
Reflecting on the operational earnings mentioned in the article, it's worth noting that Alaska Air has been profitable over the last twelve months. Two InvestingPro Tips that align with this narrative are: Net income is expected to grow this year, and analysts predict the company will be profitable this year. These insights, combined with the fact that 5 analysts have revised their earnings upwards for the upcoming period, suggest a favorable outlook for Alaska Air's financial performance. For those looking to delve deeper into Alaska Air's financials and future prospects, there are additional InvestingPro Tips available at https://www.investing.com/pro/ALK. Use coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, and explore beyond the 6 additional tips listed on InvestingPro for a comprehensive investment analysis.
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