Stephen Trent, an analyst from Citi, has initiated a new Hold rating on Frontier Group Holdings (ULCC).
Stephen Trent has given his Hold rating due to a combination of factors influencing Frontier Group Holdings. The company has shown operational improvements, outperforming some of its discount peers by generating a modest positive free cash flow. However, despite these advancements, the airline faces significant challenges that temper its growth prospects.
Frontier’s earnings growth is heavily reliant on tax credits, and the company is likely to encounter increased labor costs as it negotiates new contracts with pilots. Additionally, the impact of tariffs could pressure its sale/leaseback activities, and the lack of international long-haul routes may make it more vulnerable to recent tariff and consumer market disruptions. These factors contribute to the difficulty in justifying a price-to-earnings premium over its network peers, leading to a Hold rating.
In another report released on March 4, Deutsche Bank also downgraded the stock to a Hold with a $8.00 price target.
Based on the recent corporate insider activity of 61 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of ULCC in relation to earlier this year.