Will Alaska Air Stock Rebound To $70?

Alaska Air has faced significant challenges in the airline industry, with its stock price currently around $40 per share, a stark decline from its peak of approximately $74 in April 2021. The airline's financial outlook has worsened, prompting a revision of its 2024 earnings per share guidance to a range of $3.50 to $4.50, down from a previous estimate of $3.25 to $5.25. This adjustment reflects broader industry pressures, including rising operational costs and pricing difficulties. The airline's revenue has increased from $6.2 billion in 2021 to $10.5 billion in the last twelve months, but this growth has not translated into improved earnings, which have fallen to $1.76 per share compared to $3.77 per share in 2021. Additionally, fuel costs have risen by 3% year-over-year, further straining profitability. Alaska Air's total debt remains around $4 billion, leading to a high debt-to-equity ratio of 80%, which raises concerns about its financial stability. Despite these challenges, analysts remain cautiously optimistic about Alaska Air's stock potential. They estimate a valuation of $48 per share, indicating a possible upside of around 20% from its current trading levels. This suggests that while the airline faces significant hurdles, there may still be opportunities for recovery in the stock market. The airline industry as a whole has struggled in early 2024, with many companies adjusting their forecasts amid economic uncertainties. Alaska Air's performance will be closely monitored as it navigates these turbulent conditions and seeks to regain investor confidence.