ALGT: Rising Margins And Demand Will Support Re-Rating Ahead

Analysts have raised their price target on Allegiant Travel to approximately $105 from about $80 per share, reflecting a lower perceived risk profile and improved margin expectations following updated industry models and recent Q3 commentary.

Analyst Commentary

Bullish analysts have steadily increased their price targets on Allegiant Travel in recent weeks, signaling growing confidence that the company can deliver on margin improvement and more resilient demand trends into Q4 and 2025.

Recent model updates incorporate stronger revenue per available seat mile and better cost visibility, which together support a re-rating of the shares toward a higher, more normalized earnings multiple.

Bullish Takeaways

• Successive price target increases from the low $50s into the $60 to $70 range reflect rising conviction that Allegiant Travel can execute against its Q3 and Q4 plans while stabilizing profitability.
• Analysts see improving demand and fare trends as powerful offsets to modest cost pressure, supporting upside to current margin and free cash flow assumptions embedded in valuation models.
• Updated industry frameworks, which highlight a widening gap between stronger operators and the rest of the sector, increasingly place Allegiant Travel on the right side of that divide and warrant a lower perceived risk discount.
• As the airline industry moves into what is described as an early to middle phase of structural change driven by technology enabled merchandising, bullish analysts view Allegiant Travel as positioned to capture incremental revenue opportunities and narrow its valuation gap with better rated peers.

What's in the News

• Allegiant launched Allegiant Hotels in partnership with Rocket Travel by Agoda, allowing Allways Rewards members to earn and redeem points on a global hotel inventory and expanding loyalty engagement beyond the airline network (company announcement).
• The company reported strong October 2025 traffic, with scheduled passengers up to about 1.49 million and load factor improving to 81.9%, supported by higher available seat miles and departures year over year (preliminary operating results).
• Allegiant announced 30 new nonstop routes, including service to four new markets and expanded connectivity to major leisure destinations, with introductory one way fares starting around $39 to $69 on select routes (product announcement).
• Pilots represented by Teamsters Local 2118 held informational pickets at all 22 crew bases after authorizing a strike by 97%, citing below industry compensation and quality of life concerns that could affect pilot retention and operational reliability (labor announcement).
• Management reiterated guidance for a double digit operating margin in the fourth quarter of 2025, and highlighted expectations for improved profitability despite ongoing labor and cost pressures (corporate guidance).

Valuation Changes

• Fair Value: increased significantly from $80.00 to $105.00 per share, reflecting a higher implied equity valuation.
• Discount Rate: decreased moderately from 12.32% to approximately 11.48%, indicating a lower perceived risk profile.
• Revenue Growth: edged down slightly from about 9.11% to roughly 8.32%, suggesting a more conservative top line outlook.
• Net Profit Margin: improved meaningfully from approximately 7.95% to around 10.27%, signaling stronger expected profitability.
• Future P/E: rose marginally from about 7.23x to roughly 7.35x, implying a modestly higher valuation multiple on forward earnings.