SNCY: Earnings Should Improve With Full Cargo Operations And Firmer Yields Ahead

Analysts recently raised their price targets on Sun Country Airlines Holdings by as much as $8. They cited stronger long-term earnings forecasts, full cargo capacity, and improved passenger yields as key drivers of the upward revisions.

Analyst Commentary

• Price targets on Sun Country Airlines Holdings have been raised across the board, with some major firms boosting estimates through 2027 based on stronger growth projections.
• Expanded cargo operations reaching full potential are expected to provide a steady earnings tailwind, improving the company’s revenue mix and operating leverage.
• Improved passenger yields, especially out of the Minneapolis–Saint Paul base, suggest a firmer supply and demand balance that could help sustain margin expansion.
• Recent estimate revisions reflect above-consensus profit forecasts for the coming years, signaling analyst confidence in management’s execution and strategic positioning in a shifting airline industry.

• Some market watchers maintain neutral ratings despite price target increases, reflecting caution about the pace and sustainability of industry recovery.
• The broader U.S. airline sector is described as undergoing a complex transformation, and not all carriers are expected to benefit equally. There are concerns about potential winners and losers as the competitive landscape evolves.
• Profit gains are anticipated by some analysts to concentrate among a few leading airlines, implying that Sun Country may face challenges in capturing outsized industry share if competitive pressures intensify.
• Certain forecasts note that while product de-commoditization and technology investments offer opportunity, execution risk remains as the company adapts to new retailing and merchandising strategies.

What's in the News

• Fleet service workers ratified their first collective bargaining agreement with Teamsters Local 970, securing significant wage increases, stronger job security, improved benefits, and enhanced workplace safety. The three-year contract was approved by nearly 82% and sets improved pay scales and work rules. (Key Developments)
• Between July and September 2025, the company completed a share repurchase of 843,107 shares, or 1.58% of outstanding shares, for $10 million under its previously announced buyback plan. (Key Developments)
• Sun Country Airlines reported third quarter and year-to-date operating results through September 2025, showing a slightly improved load factor year over year despite modest declines in passenger miles and total passengers carried. (Key Developments)
• The company issued fourth quarter 2025 guidance, forecasting total revenue between $270 million and $280 million and an operating income margin ranging from 5% to 8%. (Key Developments)
• The airline extended its selling schedule through September 2026, offering nonstop, affordable travel to over 100 destinations and introducing new summer routes and increased service on popular coastal and mountain destinations. (Key Developments)

Valuation Changes

• Fair Value Estimate remains unchanged at $18.13 per share. This reflects consistency in intrinsic valuation assumptions.
• The discount rate has fallen modestly to 10.06%, down from 10.45%. This indicates a slightly lower perceived risk profile or cost of capital.
• Revenue growth expectations are essentially flat, ticking up fractionally to 8.35% from 8.35% previously.
• The net profit margin estimate has declined slightly to 11.40%, compared to the prior 11.43% forecast.
• The future P/E ratio is projected at 7.69x, down from 7.90x. This signals a modest compression in forward earnings multiples.