Sun Country Airlines: Merger-Driven Valuation Limits Upside, Triggering Downgrade to Hold

In a report released yesterday, Thomas Fitzgerald CFA from TD Cowen downgraded Sun Country Airlines Holdings to a Hold, with a price target of $18.00.

Thomas Fitzgerald CFA has given his Hold rating due to a combination of factors related primarily to the pending merger and current valuation. He believes the likelihood of regulatory approval for the merger with Allegiant Travel Company is very high, and notes that Sun Country’s current share price already reflects more than a 90% probability that the deal will go through. Based on Allegiant’s current stock price and the merger terms, the implied takeout value for Sun Country is around $18.47 per share, only modestly above his new $18 price target and close to where the stock is trading. This limited upside relative to the implied deal value and revised target price leads him to see a more balanced risk/reward profile rather than a clear buying opportunity.

He also points out that near‑term fundamentals provide little additional upside catalyst. His forecast for Sun Country’s upcoming fourth-quarter 2025 earnings is slightly below the market consensus, in part due to operational disruptions that have weighed on results. Looking ahead to the first quarter of 2026, he expects only modest revenue growth and unit expansion, with profitability remaining solid but within a fairly typical margin range. Taken together, the combination of a fully valued stock price under the merger framework, slightly softer near-term earnings expectations, and limited incremental upside justifies his decision to move the rating from Buy to Hold and to trim the price target from $21 to $18.

Based on the recent corporate insider activity of 64 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of SNCY in relation to earlier this year.