Morgan Stanley Bullish on LatAm Airlines Group (LTM) Stock - Potential for 32% Upside!
On Tuesday, Morgan Stanley initiated coverage of LatAm Airlines Group (NYSE:LTM) with an Overweight rating and a price target of $40.00, citing the airline's undervaluation compared to pre-pandemic levels. LatAm Airlines Group's current P/E multiple of 7.6x NTM EPS is 55% lower than before the global health crisis, indicating significant room for re-rating.
Compared to U.S. legacy carriers, LatAm Airlines Group and Copa have shown stronger earnings recovery trajectories, with LatAm Airlines Group's net income up 277% from Q4 2019. Morgan Stanley's analysis suggests a 32% upside in LatAm Airlines Group's P/E multiple, supported by strong earnings recovery and undervaluation.
In contrast, Citi has reinstated coverage on LatAm Airlines Group with a Neutral rating and a price target of $26.50, citing challenges in justifying a premium valuation compared to Copa. Citi's analysis highlights operational improvements but warns of potential short-term overhang risk due to an upcoming lock-up agreement expiration in late November.
InvestingPro data further supports Morgan Stanley's bullish stance, with a low P/E ratio and strong financial health indicators for LatAm Airlines Group. The company's revenue and EBITDA growth underscore its earnings recovery trajectory, positioning it as a prominent player in the Passenger Airlines industry.
In conclusion, LatAm Airlines Group's stock presents an opportunity for investors to capitalize on potential re-rating and strong earnings recovery. With insights from Morgan Stanley, Citi, and InvestingPro, investors can make informed decisions on the airline's market position and future performance.