On Wednesday, TD Cowen adjusted its outlook on shares of Hawaiian Holdings (NASDAQ:HA), increasing the stock's price target to $18.00 from the previous $13.00. The firm maintained its Hold rating on the shares.
The adjustment follows the news that Hawaiian Holdings and Alaska Air (NYSE:ALK) Group did not face a lawsuit from the Department of Justice (DOJ) to block their proposed merger. With the DOJ's review period expiring without action, the companies are now set to seek final approval from the Department of Transportation (DOT).
The proposed merger between Hawaiian Holdings and Alaska Air Group has been under scrutiny, as such consolidations in the airline industry often attract regulatory attention due to competition concerns. The absence of a challenge from the DOJ is a significant step forward for the two companies, signaling that the merger may proceed without the legal hurdles that can arise from antitrust issues.
TD Cowen's revised stock price target of $18.00 aligns with the merger agreement's negotiated takeout price. This figure represents the value that has been agreed upon for Hawaiian Holdings in the context of the merger. The Hold rating suggests that TD Cowen advises investors to maintain their current position in the stock without buying more shares or selling existing holdings at this time.
The analyst from TD Cowen commented on the developments, stating that Hawaiian Holdings and Alaska Air Group will now collaborate with the DOT to secure the final green light for their merger. This cooperation is the next step in finalizing the transaction, which has already cleared a significant regulatory hurdle.
Investors and the market at large will be watching closely as Hawaiian Holdings and Alaska Air Group continue to navigate the final stages of their merger approval process. The outcome of the DOT's decision will likely have a direct impact on the stock's performance and the future of both companies within the competitive landscape of the airline industry.
Despite Hawaiian Holdings reporting an adjusted EBITDA loss of $21 million for Q2 2024, the company managed to raise $400 million through financing 10 A321 neo aircraft and exchanged $1.2 billion in loyalty bonds due in 2026 for new bonds maturing in 2029.
Moreover, the airline has successfully deployed Starlink inflight connectivity across all 18 Airbus A321neos. These recent developments come amidst a global shortage of new aircraft, which has prompted airlines to consider mergers and acquisitions as a strategy to increase their capacity and market shares.
The proposed deal between Alaska Air and Hawaiian Holdings is particularly significant as it would grant Alaska Air control over more than half of the flight market to Hawaii. The outcome of this merger remains under close examination by the DOJ. The information in this article is based on recent press release statements.
InvestingPro Insights
As Hawaiian Holdings (NASDAQ:HA) moves closer to finalizing its merger with Alaska Air Group, investors are closely monitoring the company's financial health and stock performance. Recent data from InvestingPro provides a snapshot of Hawaiian Holdings' current market standing.
With a market capitalization of approximately $919.53 million and a negative P/E ratio of -2.58, the company's financial metrics reflect some challenges. The company's revenue for the last twelve months as of Q2 2024 stands at $2774.22 million, with a slight quarterly revenue growth of 3.53%.
InvestingPro Tips suggest that Hawaiian Holdings operates with a significant debt burden and may have difficulty making interest payments on its debt, which could be of concern to potential investors. Additionally, the stock's price movements have been quite volatile, which is reflected in the substantial returns over the last week, month, three months, and year, with the stock trading near its 52-week high.
For investors looking to delve deeper into Hawaiian Holdings' financials and stock performance, InvestingPro offers additional tips and metrics. There are currently 4 analysts who have revised their earnings downwards for the upcoming period, indicating potential headwinds for the company's future profitability.
For those interested in exploring further insights and analysis, InvestingPro features a comprehensive list of additional tips that can help investors make informed decisions.
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