: Alaska Air downgraded to market perform from strong buy at Raymond James as Hawaiian deal likely to weigh on sentiment

Alaska Airlines Inc. ‘s stock ALK was downgraded to market perform from strong buy by Raymond James on Monday, after it announced it would acquire Hawaiian Airlines parent Hawaiian Holdings Inc. HA for $18 a share, or a 270% premium over its closing price on Friday. “Admittedly, with the acquisition unlikely to close for 12-18 months, the earnings recovery outlook that supported our prior view is intact, with the only likely change a delay in resuming a dividend,” analyst Savanthi Syth wrote in a note to clients. “Moreover, we believe this acquisition makes sense longer term and Alaska has the balance sheet and earnings strength to see it through. However, given the current macro uncertainty, the complexity of executing the merger should weigh on sentiment and likely limits the near- to medium-term upside case,” she wrote. Alaska’s stock was down 11.9% while Hawaiian was up 188.5%.

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