On Monday, TD Cowen reaffirmed its Buy rating on shares of Sun Country Airlines Holdings (NASDAQ:SNCY), with a steady price target of $20.00. The endorsement comes following the airline's recent financial disclosures. Last week, Sun Country reported an adjusted earnings per share (EPS) of $0.06 for the second quarter of 2024, surpassing both the analyst's and consensus expectations of $0.03 and $0.05, respectively. Despite this, the company's guidance for the third quarter was set below market estimates.
Following the results, TD Cowen has adjusted its projections for Sun Country in 2024. The firm suggests that the current year should be considered a transitional period, with significant changes expected around mid-2025 when the airline plans to expand its cargo operations. The analyst anticipates that cargo will account for approximately 20% of Sun Country's revenue by 2026, which marks a substantial increase from the roughly 10% projected for 2024.
Management at Sun Country is reportedly maintaining a conservative balance sheet, which is strategically intended to provide the company with the flexibility to take advantage of market opportunities as they arise. This approach is seen as a preparatory step for the airline to leverage potential market dislocations in the future.
The shift towards cargo is a strategic move for Sun Country as it seeks to improve its economic position. The company's management is poised to navigate through the current year, which is deemed less consequential in comparison to the anticipated strategic shift in mid-2025 that is expected to enhance the airline's financial dynamics.
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