UBS Raises Frontier Group PT to $5, Maintains Neutral Rating

UBS Raises Frontier Group PT to $5, Maintains Neutral Rating

In a recent development, UBS Group has raised its price target for Frontier Group Holdings Inc (NASDAQ: ULCC) to $5, while maintaining a Neutral rating. This move comes amidst a challenging financial quarter for Frontier Airlines, which reported a second-quarter net loss of $0.31 per share, missing analysts’ expectations. Despite this, UBS acknowledges significant potential for investors with higher risk tolerance, citing the airline’s option-like upside and downside on externalities Seaport Global Securities initiates Frontier Group stock with Neutral rating^[2].

Frontier Group, an ultra-low-cost carrier based in the United States, operates a fleet of Airbus aircraft serving destinations across the U.S., Mexico, and the Caribbean. The airline has shown strong returns over the past three months despite operating with significant debt of $4.87 billion and negative EBITDA of $254 million. Deutsche Bank recently upgraded Frontier Group Holdings from Hold to Buy, raising its price target to $8.00 from $4.00, citing the airline’s potential benefits from Spirit Airlines’ bankruptcy due to network overlap Seaport Global Securities initiates Frontier Group stock with Neutral rating^[2].

UBS’s decision to raise the price target reflects the potential for Frontier Group to benefit from external market conditions. However, the Neutral rating indicates a cautious stance due to the airline’s financial challenges and the uncertainty surrounding its strategic moves. Frontier Airlines has launched promotional sales, offering roundtrip fares starting at $38 to various destinations in the U.S., Caribbean, and Latin America. Additionally, the airline announced a promotion allowing loyalty program members from select rival airlines to purchase Frontier Elite Gold status for $69, providing premium benefits through December 2026 Seaport Global Securities initiates Frontier Group stock with Neutral rating^[2].

In summary, UBS Group’s raise in the price target for Frontier Group Holdings Inc reflects the potential for upside opportunities in the airline sector, while the Neutral rating underscores the cautious approach due to the airline’s current financial situation. Investors should carefully consider the risks and potential rewards before making investment decisions.