ULCC Stock Forecast & Price Target

Frontier Group Holdings Inc has a strong operational presence in Florida, which accounts for approximately 30% of its overall flying, positioning the company favorably as the industry supply in the state has seen a 22% increase compared to 4Q19. Additionally, the company has experienced a significant enhancement in its co-brand loyalty revenue per passenger, up 40% year-over-year, attributed to increased card acquisition and spending. Furthermore, the overall supply growth in key markets such as Denver, Orlando, Phoenix, and Miami, exceeding 20% since 2019, indicates a potentially favorable environment for Frontier's domestic air transportation offerings.

Frontier Group Holdings has encountered significant challenges resulting in a contracted valuation multiple, primarily driven by ongoing operational losses, open labor contracts, and high leverage, which is projected at 5x for 2025 EBITDAR. The company has reported a sharp pre-tax margin contraction to -7.5%, compared to 3.3% in the previous year, underscoring a deteriorating profitability landscape. Combined with uncertainties surrounding revenue and costs, these factors contribute to a negative outlook for the company's financial stability and growth potential.