Sun Country Airlines Wins JPMorgan Bullish View On Revenue Diversity

Sun Country Airlines Holdings Inc's SNCY Charter and Cargo operations, which contribute around 33% of the company's total revenues, create "differentiating demand drivers" that are not dependent on consumer discretionary spending on air travel, according to JPMorgan.

The Sun Country Airlines Analyst: Analyst James Kirby initiated coverage of Sun Country Airlines with an Overweight rating and a price target of $23.

The Sun Country Airlines Thesis: The company's low-cost carrier share in MSP (Minneapolis-St. Paul) international airport has grown by 23% since 2019 and the improvement in industry supply is likely to support the U.S. airline industry, Kirby said in the initiation note.

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Meanwhile, Sun Country Airlines' Charter operation has become "sizable," and its Cargo operation is growing, he stated.

"Additionally, its shared resources strategy (pilots and aircraft across its segments) enable shifting resources to minimize seasonality and chase higher-margin business," the analyst wrote.

"We model 2025 and 2026 pre-tax margins of 13% and 14%, leading our coverage universe, driven by a ramping Cargo business and improving domestic leisure market," Kirby said. He added that Sun Country Airlines "possess profitability, diversity of revenue, a superior balance sheet, and margin expansion potential."

SNCY Price Action: Shares of Sun Country Airlines had risen by 1.3% to $16.85 at the time of publication Wednesday.

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