Analysts see better days ahead for AirAsia, trim target prices
KUALA LUMPUR: AirAsia Group Bhd's outlook is set to improve towards year-end as fuel prices ease and travel demand holds up, although analysts have cut their target prices following a weak second quarter.
Analysts at PublicInvest and Hong Leong Investment Bank have lowered their target prices for AirAsia Group Bhd amid a weak second quarter, but maintain a positive outlook for the airline's future performance. PublicInvest has cut its earnings forecasts for AirAsia by 27% for the financial years 2026 to 2028, reflecting weaker demand, lower capacity, and yields.
Hong Leong Investment Bank has kept its Buy recommendation but trimmed the target price to RM1.86 from RM2.20. Both research houses attribute the downgrade to AirAsia's shift towards a margin-over-volume strategy, cutting capacity, optimising its network, and raising fares to protect yields. Despite the cautious assessments, both analysts expect travel demand to improve in the fourth quarter, and AirAsia to restore capacity to fourth-quarter 2025 levels, supported by a buffer from fuel prices easing to around US$140 to US$150 per barrel.
However, geopolitical uncertainty, fuel prices, and movements in the US dollar remain key risks to the airline's earnings outlook.
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