UBS initiated coverage of Alaska Air (ALK) with a Buy rating and $54 price target. The analyst believes the stock’s underperformance post Hawaiian Holdings (HA) deal announcement has created a compelling entry point. Either one of the two outcomes, the deal proceeding or not, will have positives for the stock, the analyst tells investors in a research note. The firm sees potential for Alaska Air to benefit from several positive industry drivers over the next 12-18 months, including improving revenue per available seat mile, moderation in cost pressures, and acceleration in business travel. It sees a “solid 3:1 upside/downside reward” at these levels.
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