Are Singapore Airlines shares worth buying?
The national carrier’s shares rallied strongly after DBS analysts raised their rating on the stock to ‘buy’.
- Singapore Airlines (SGX: C6L) share price rose to S$5.49 on Wednesday (18 May 2022)
- The stock saw a boost after DBS analysts lifted their price targets and ratings
- The group also released its April 2022 operating results, in which passenger capacity spiked up 136% year-on-year
- Keen to trade SIA shares? Open an account with us to long or short the stock now.
Singapore Airlines stock price: what’s the latest?
Singapore Airlines (SIA) shares rallied over 6% this week to S$5.49, after the airline posted its April 2022 operating results.
Singapore Airlines and Scoot, the two airlines in the SIA Group, carried a total of 1.45 million passengers in April 2022, up 62.7% from the previous month.
Group passenger capacity (measured in available seat-kilometres) reached 57% of pre-Covid-19 levels in April 2022, six percentage points above the month before.
The passenger load factor for the month stood at 72.7%, which is the highest since the onset of the pandemic, the group said. This was an improvement of 18.2 percentage points month-on-month or 59 percentage points year-on-year.
The national carrier’s shares have declined by 1.3% in the last one month, amid concerns of further interest rate hikes and the global economic impact of China’s zero-Covid policies.
The blue-chip counter, which has an average price target of S$5 (representing a 6% downside from the latest trading price of S$5.33) and rating of ‘neutral’ (based on SGX StockFacts consensus data), is also up by over 6% year-to-date.
Why did DBS rate SIA a ‘buy’?
Earlier that same day, DBS analysts also published their latest investment analysis on the SIA stock, in which they lifted price targets and ratings.
The analysts raised their price target on SIA to S$6.20 from S$4.90 previously, while upgrading a ‘hold’ call to ‘buy’, on the back of higher net profit estimates.
They noted that SIA could rebound faster than anticipated, as the lifting of regional travel restrictions continue to pick up pace.
DBS posited that SIA is likely to be the regional frontrunner as countries reopen to tourists and airlines recover. In particular, Japan’s reopening to tourists is expected to drive a significant revival in inter-region travel for the group.
The analysts also predicted that SIA’s passenger volumes could hit 70% and 96% of pre-pandemic levels by end-FY2023 and end-FY2024 respectively.
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