VLRS - Azul rises as Barclays upgrades; Gol Volaris maintained
2023-07-10 13:04:38 ET
Azul S.A. ( NYSE: AZUL ) rose 1.4% on Monday as Barclays upgraded shares on an improved liquidity profile thanks to stronger currencies, lower jet fuel prices and resilient demand.
The Brazilian airline was bumped to Equalweight from Underweight as carriers in Latin American are seeing a favorable macro and operating environment.
"A lower jet fuel price coupled with a stronger currency is perhaps the best macro framework for Latin America’s air carriers," Barclays analysts ??Pablo Monsivais and Manuel Parra wrote in a note. In addition, regional demand has been strong.
The firm also increased its price target for Azul ( AZUL ) to $14 from $8, though it noted that "yield expansion in the Brazilian market is close to peaking."
Gol Linhas Aéreas Inteligentes S.A. ( GOL ) got a price target bump to $5.50 from $3.50 while Controladora Vuela Compañía de Aviación, S.A.B. de C.V. ( VLRS ) saw its target rise to $22 from $16.
That said, the bank prefers Copa Holdings S.A. ( CPA ) and Volaris ( VLRS ) as they have structural advantages from participating in growing markets, facing only mild competition and having strong balance sheets. They also trade at attractive valuations versus Brazilian peers.
More on airlines:
- GOL Linhas Aéreas Inteligentes sees ~21% growth in June prelim departures
- Copa Holdings reports a 15.3% rise in capacity for May
- Global airline industry profits are strengthening despite economic turbulence
- Azul Non-GAAP EPS of -$0.99, revenue of R$4.48B
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Azul rises as Barclays upgrades; Gol, Volaris maintained