ALGT - Allegiant Travel stock drops after Bank of America issues bear rating

2023-05-01 07:18:21 ET

Bank of America downgraded Allegiant Travel Company ( NASDAQ: ALGT ) to an Underperform rating from Neutral on Monday.

Analyst Andrew Didora noted slowing domestic volumes present a risk to the leisure carrier's revenue with earnings risk compounded by operational hurdles such as pilot hiring and a new fleet type.

ALGT’s below-market pilot compensation is observed to have driven attrition in the recent environment of wage inflation. "Staffing shortages are coupled with ongoing labor contract negotiations, and we forecast 2H23 unit costs ex-fuel +17.5%," warned Didora.

Bank of America lowerered it s2023 EPS estimate on ALGT to $7.44 from $8.04 and dropped the 2024 EPS estimate to $9.12 from $10.00.

The firm's price objective was clipped to $75 from $95 and is based on 5.5X multiple to the 2023 EBITDAR estimate. The average ALGT price target on Wall Street is $101.85.

Shares of Allegiant Travel ( ALGT ) fell 1.98% in premarket trading on Monday to $101.86.

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