Virgin Australia shares lift as UBS sees 'compelling' earnings outlook
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More news: Shares in Virgin Australia advanced after UBS gave the airline a 'buy' rating and a hefty $3.90 target price.
Virgin shares were up 2.5% to $3.29 at 12:45pm AEST, having added more than 13% since floating on the exchange last month.
Qantas shares fell 0.2% after UBS analyst Andre Fromyhr said Virgin's valuation looks more appealing than the rival carrier, offering a stronger growth outlook and portfolio mix.
UBS initiates coverage of Virgin Australia with 'buy' rating
The news: UBS has initiated its coverage of newly listed Virgin Australia with a 'buy' rating and 12-month target price of $3.90 per share.
The numbers: Virgin shares last traded at $3.21 having listed at $2.90 last month.
The context: UBS analyst Andre Fromyhr said there is "a lot to like" about Virgin today compared with when it was previously listed.
He noted that the airline's simplified portfolio, with no more loss-making long-haul flights, "should resonate well with investors" attracted to the relatively high quality and low risk Australian domestic aviation market.
UBS, which was one of the joint lead managers for Virgin's initial public offering, sees a "compelling earnings outlook" into FY26 with relatively stable fares, falling fuel expenses and transformation benefits.
The company's current valuation also looks appealing relative to rival carrier Qantas, Fromyhr said, and offers a stronger growth outlook and portfolio mix.
The source: UBS research
