Alaska Air: Strong Earnings Momentum and Synergy Upside Support Overweight/Buy Rating

Morgan Stanley analyst Ravi Shanker has maintained their bullish stance on ALK stock, giving a Buy rating on January 23.

Ravi Shanker has given his Buy rating due to a combination of factors that suggest Alaska Air is regaining positive momentum after a turbulent 2025. He highlights that the company finished the year with earnings meaningfully above expectations in the fourth quarter, helped by better cost control, more favorable fuel expense, and a lower tax rate. While management’s first-quarter outlook and full-year range are conservative and unusually broad, the tone of the call was notably upbeat, and management indicated that, if current operating and demand trends persist, results could land toward the upper end of the guidance range, above what many investors had been assuming.

In addition, Shanker underscores that synergies are tracking ahead of plan and that early 2026 booking trends are particularly strong, echoing strength reported by other major carriers. He sees a credible path to earnings of $6.50 per share without needing additional macro or industry tailwinds, and he notes that continued improvement in U.S. domestic demand could provide further upside. Management’s reaffirmation of its longer-term target of more than $10 in EPS implies the potential for a multiple-fold increase in earnings over the next two years, which he believes can justify a higher valuation multiple and eventually reestablish Alaska Air as one of the higher-quality names in the airline sector. Despite the need for a few more quarters of solid execution, these dynamics collectively support his Overweight/Buy recommendation on the stock.

In another report released on January 23, Bank of America Securities also maintained a Buy rating on the stock with a $70.00 price target.