UBS Affirms ‘Neutral’ Stance on Alaska Air (ALK), Expects Solid Q2 Results

Alaska Air Group, Inc. (NYSE:ALK) is one of the best airline stocks to buy according to hedge funds. On July 7, analysts at UBS initiated coverage of the stock with a ‘Neutral’ rating and a $49 price target. The stance comes amid expectations that the airline will deliver second-quarter results in line with guidance ranges.

UBS is optimistic that Alaska Air demand trends did stabilize in the second quarter. Consequently, the research firm expects the airline to deliver $1.56 in earnings per share, which is better than the consensus estimate of $1.53 and within the guidance range of $1.15 to $1.65.

Nevertheless, the research firm expects the company to deliver a 1% decline in revenue per available seat mile compared to the consensus estimate that projects a 0.9% decline. Likewise, UBS believes Alaska Air anticipated a year-over-year decline in RASMA in June due to increased industry capacity.

UBS analysis suggests that the airline maintained adequate load factors even though fares were lower in the quarter compared to the previous year. Additionally, Alaska Airlines may have faced pressure due to weakness in domestic main cabin performance, particularly in San Francisco.

Alaska Air Group, Inc. (NYSE:ALK) is a major airline primarily serving the West Coast of the United States, with a focus on connecting cities in Alaska, Hawaii, and the broader West Coast to over 100 destinations. It also operates a cargo service specializing in the shipping of various goods.

READ NEXT: Goldman Sachs REIT Stocks: Top 12 Stock Picks and Goldman Sachs Healthcare Stocks: Top 10 Stock Picks.

Disclosure: None. This article is originally published at Insider Monkey.