Morgan Stanley has revised its price target for Frontier Group (ULCC, Financial), reducing it from $10 to $9 while maintaining an Equal Weight rating for the airline's shares. The adjustment follows Frontier's disappointing performance in Q1 and a less favorable outlook for Q2, which did not meet analysts' expectations. Originally, a major operational restructuring was expected to yield significant returns in the latter half of 2025, but this plan is now temporarily halted. The analyst indicates that while there is substantial potential for both risk and reward, clear evidence of steady earnings per share exceeding $1 might not emerge until 2026.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 9 analysts, the average target price for Frontier Group Holdings Inc (ULCC, Financial) is $4.81 with a high estimate of $10.00 and a low estimate of $3.00. The average target implies an upside of 15.24% from the current price of $4.17. More detailed estimate data can be found on the Frontier Group Holdings Inc (ULCC) Forecast page.
Based on the consensus recommendation from 12 brokerage firms, Frontier Group Holdings Inc's (ULCC, Financial) average brokerage recommendation is currently 3.0, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Frontier Group Holdings Inc (ULCC, Financial) in one year is $7.91, suggesting a upside of 89.69% from the current price of $4.17. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Frontier Group Holdings Inc (ULCC) Summary page.
ULCC Key Business Developments
Release Date: May 01, 2025
- Total Operating Revenue: $912 million, a 5% increase from the prior year quarter.
- Revenue per Available Seat Mile (RASM): $0.0917, roughly in line with the prior year quarter.
- Total Revenue per Passenger: $116, down 6% from expectations.
- Fuel Expense: $238 million, 10% lower than the previous year quarter.
- Adjusted Non-Fuel Operating Expenses: $720 million or $0.0724 per available seat mile, 8% higher than the previous year quarter.
- Pre-Tax Loss: $40 million, yielding a 4.4% loss margin.
- Net Loss: $43 million or $0.19 per share.
- Total Liquidity: $889 million, including $684 million in unrestricted cash and cash equivalents.
- Aircraft Fleet: 163 aircraft at quarter end, with four A321neo aircraft and two spare engines delivered during the quarter.
- Capacity Reduction Impact: Expected to reduce costs and capital expenditures by over $300 million combined.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Frontier Group Holdings Inc (ULCC, Financial) reported a 5% increase in total operating revenue for Q1 2025 compared to the prior year, reaching $912 million.
- The company has implemented significant capacity reductions, expected to save over $300 million in costs and capital expenditures.
- Frontier's loyalty program enhancements, including free check bags for co-brand cardholders and simplified elite status, are showing positive growth and engagement.
- The introduction of the 'New Frontier' economy bundle has been well-received, offering competitive advantages with features like free changes and seat assignments.
- Frontier's digital upgrades, including a new Android app and upcoming iOS app and website redesign, aim to improve customer experience and engagement.
Negative Points
- Q1 2025 results were below original expectations due to a disruption in travel demand in March, driven by macroeconomic uncertainty.
- The average fare per passenger decreased by 6%, with total revenue per passenger also falling short of expectations.
- Frontier experienced a pre-tax loss of $40 million and a net loss of $43 million for the quarter.
- The company is facing challenges with lower average daily aircraft utilization and increased station costs.
- Despite efforts to stabilize, the company anticipates a loss in Q2 2025, with a projected per-share loss of $0.23 to $0.37.
