- Raymond James analyst Savanthi Syth lowered the price target on Azul SA (NYSE:AZUL) to $12 (an upside of 83%) from $22 while maintaining the Outperform rating on the shares.
- The analyst updated earnings estimates to reflect a higher fuel price forecast, including elevated refining margins, and a weaker BRL relative to the USD, partly offset by strong demand and yields.
- Syth believes the current share price offers an attractive risk-reward point, supported by Azul's differentiated network, unique cargo opportunity, and potential to meaningfully increase its presence at the profitable Sao Paulo-Congonhas (CGH) airport.
- CGH is expanding the number of slots by ~30% over a ~2 year period. While Gol Linhas Aereas Inteligentes S.A. (NYSE:GOL) and LATAM Airlines Group S.A. (OTC:LTMAQ) are likely to continue to dominate the airport, Azul is likely to double its exposure, the analyst noted.
- Syth mentioned that Azul believes it could generate more profits on a per-route basis than GOL or LATAM due to its smaller-gauge aircraft being better suited for most of the markets served.
- Syth reiterated the Market Perform rating on GOL and saw better risk-reward at AZUL.
- Recently, Barclays analyst Pablo Monsivais downgraded Azul to Underweight from Equal-Weight and lowered the price target to $7 (an upside of 6.7%), from $17.
- Price Action: AZUL shares are trading higher by 2.90% at $6.56 on the last check Thursday.
Raymond James Cuts Azul's Price Target By 45%
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