The stellar rally in shares of Singapore Airlines (SG:C6L) came to a halt. Shares of Singapore’s premier airline are under pressure following a new “Sell” rating from CGS-CIMB analyst Raymond Yap on July 3.
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Despite the recent pullback, SIA shares are still up over 33% year-to-date, reflecting strong air travel demand and a decline in jet fuel prices. Thanks to the favorable operating environment, the company posted the highest net profit in its history.
While the demand environment remains strong, the rally in SIA shares indicates that the positives are already priced in. Singapore Airlines has exceeded analysts’ consensus price target, and Yap finds SIA’s valuation expensive. Meanwhile, the analyst expects competition to intensify as its peers will likely add more capacity in the coming quarters.
Recent Ratings
While Yap downgraded SIA stock, Paul Yong of DBS reiterated a Hold rating on June 26. However, his price target suggests a 7.23% downside potential from current levels.
Meanwhile, CLSA analyst Jeffrey Kiang and Phillip Securities analyst Peggy Mak maintained their Sell recommendations on SIA shares last month.
Further, on June 19, UOB Kay Hian analyst Roy Chen downgraded shares of Singapore Airlines, citing its “lofty valuation.”
Is SIA a Buy or Sell?
The demand for air travel remains robust, and forward sales remain healthy. However, analysts believe that SIA’s risk-reward ratio is reasonably balanced at the current market price. C6L stock has a Hold Consensus rating on TipRanks based on three Buy, two Hold, and four Sell recommendations.
The average price target is S$7.04, which indicates a 2.07% downside potential from the current price level.
While SIA shares have mostly received bearish ratings from analysts in the recent past, Sembcorp Industries (SG:U96) is one SGX stock that has caught several Buy recommendations from analysts over the past month.
Is Sembcorp Industries a Good Stock?
SG:U96 stock has a Strong Buy Consensus rating on TipRanks based on nine unanimous Buy recommendations. Analysts’ average price target of S$5.79 is 1.89% above its current market price.
