Alaska Air (ALK) is a passenger and freight airline based in the United States. The airline travels to over 115 locations through its Mainline, Regional, and Horizon segments.
The firm announced better-than-expected third-quarter profits, with top- and bottom-line numbers above Wall Street expectations. The corporation made substantial progress in bolstering its fleet in order to recover from the COVID-19 interruptions.
Let’s have a look at what’s changed in the company’s risk factors that investors should know. (See Insiders’ Hot Stocks on TipRanks)
Alaska Air Risk Factors
According to the new TipRanks Risk Factors tool, Alaska Air’s main risk category is Production, which accounts for 27% of the total 26 risks identified. The next two major risk factor contributors are Finance & Corporate and Legal & Regulatory, which stand at 23% and 15%, respectively.
Under the Litigation & Legal Liabilities sub-category, the company said, “Mandatory vaccination programs could have a material adverse impact on the Company’s operations and financial results.”
President Biden signed an executive order on September 9, mandating all companies with U.S. government contracts to verify that their employees are completely vaccinated against COVID-19. However, employers may exempt employees from the vaccine obligation if they have a genuine medical or religious exemption.
Alaska Airlines cautions that implementing these vaccine requirements might result in high employee turnover, which could have a substantial impact on operations, finances, and cash flow.
On a brighter note, the overall sector average for the Finance & Corporate risk factor is 36.5%, higher than the average risks in that category for Alaska Air.
Wall Street’s Take
Following the Q3 earnings announcement, BofA Securities analyst Andrew Didora reiterated a Buy rating on Alaska Air stock but decreased its price target to $75 from $80. Alaska Air’s new price target suggests 42.8% upside potential.
Consensus among analysts is a Strong Buy based on seven unanimous Buy ratings in the last three months. The average ALK price target is $81.43, reflecting a potential 12-month upside of 55% from current levels.
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