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Shareholders in Allegiant Travel Company (NASDAQ:ALGT) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investors have been pretty optimistic on Allegiant Travel too, with the stock up 17% to US$219 over the past week. Could this upgrade be enough to drive the stock even higher?
After the upgrade, the ten analysts covering Allegiant Travel are now predicting revenues of US$1.6b in 2021. If met, this would reflect a sizeable 30% improvement in sales compared to the last 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting US$5.09 in per-share earnings. Prior to this update, the analysts had been forecasting revenues of US$1.4b and earnings per share (EPS) of US$4.55 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
See our latest analysis for Allegiant Travel
It will come as no surprise to learn that the analysts have increased their price target for Allegiant Travel 8.7% to US$215 on the back of these upgrades. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Allegiant Travel, with the most bullish analyst valuing it at US$216 and the most bearish at US$144 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Allegiant Travel's past performance and to peers in the same industry. The analysts are definitely expecting Allegiant Travel's growth to accelerate, with the forecast 30% growth ranking favourably alongside historical growth of 5.2% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 25% per year. Allegiant Travel is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Allegiant Travel.