Citi analyst Stephen Trent has maintained their bullish stance on VLRS stock, giving a Buy rating on February 25.
Stephen Trent has given his Buy rating due to a combination of factors that highlight the potential for Controladora Vuela Compania de Aviacion SAB de CV (Volaris) to outperform in the long term despite current challenges. The airline’s projected EBIT margin for 2025, although lower than previous years, remains significantly higher than its US-based discount peers. Additionally, Volaris has managed to reduce its leverage to 2.6x by the end of 2024, and its free cash flow generation is comparable to its current market capitalization.
Despite recent declines in Volaris’ stock price and industry-wide uncertainties, Trent believes these factors are already reflected in the stock’s current valuation. The stock is trading at a 2025 free cash flow yield of 75%, which suggests a strong potential for price appreciation. Furthermore, the 4.4x EV/EBITDA target multiple is considered conservative, indicating that the stock is undervalued based on both the target multiple and the 2026 EBITDA estimate. These elements contribute to an expected share price return of 81.2%, supporting the Buy recommendation.
Trent covers the Industrials sector, focusing on stocks such as JetBlue Airways, American Airlines, and Aercap Holdings. According to TipRanks, Trent has an average return of 20.0% and a 57.75% success rate on recommended stocks.
In another report released on February 25, Evercore ISI also maintained a Buy rating on the stock with a $13.00 price target.