Allegiant (ALGT) Stock Tanks 41.5% in a Month: Here's Why
Shares of Allegiant Travel Company ALGT have lost 41.5% compared with the industry’s 40.3% decline in the past month.
Alike most of its peers, Allegiant has been hit hard by its flagging fortunes due to the sharp drop in air-travel demand in the wake of the coronavirus outbreak, which marred its prospects in the process.
Coronavirus Doldrums Hamper Allegiant’s Prospects
Due to the coronavirus-induced vanishing demand for leisure travel, Allegiant plans to reduce capacity by 15% for April and May. In fact, the company expects deeper capacity cuts (between 30% and 35%) in the coming days as demand is likely to face significant erosion moving ahead.
Allegiant apart, other carriers, namely JetBlue Airways JBLU, Alaska Air ALK and Spirit Airlines SAVE trimmed capacity following feeble demand due to the COVID-19 hazard.
Additionally, to tackle this unprecedented crisis, Allegiant suspended its quarterly dividend payouts and buybacks. It is also looking to curtail costs on account of depleting revenues. Some cost-cutting measures include freezing recruitment and halting construction of the Florida resort. Also, Allegiant’s high-debt levels are worrisome.
Southbound Estimate Revisions
The bearish sentiment surrounding the stock is evident from the Zacks Consensus Estimate for current-year earnings being revised 50.6% downward in the past 60 days to $8.52.
Additionally, Allegiant carries a Zacks Rank #5 (Strong Sell).
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JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
Allegiant Travel Company (ALGT) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
Spirit Airlines, Inc. (SAVE) : Free Stock Analysis Report
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