Credit Suisse upgraded Cathay Pacific to Outperform from Neutral on a better growth outlook.
“We expected to see a better 2018 for Cathay Pacific,” it said in a note on Friday. “On the passenger front, we expect to see yield growth turn positive at 2 percent as we see the premium demand trend likely to continue, its main competitor, Chinese airlines, being more disciplined on capacities, and a potential fuel surcharge.”
On the cargo side, Credit Suisse said it expected 3 percent yield growth, given a high base and a likely global trade growth slowdown.
The investment bank added that it expected costs to decline amid a leaner team and a more aligned fleet.
It noted that the carrier reported better-than-expected 2017 results, with recurring net profit of around HK$1.35 billion, mainly as the cargo business beat expectations.
Credit Suisse raised its target price to HK$16.70 from HK$12.40 after raising 2018-19 earnings by 29-35 percent, mainly on stronger passenger yield assumptions.
The stock ended Tuesday down 2.21 percent at HK$14.16.
