Wolfe Research upgraded Allegiant Travel to Outperform, citing a planned cash and stock acquisition of Sun Country Airlines. The deal is projected to lift Allegiant’s revenue by nearly 45% and restore double-digit operating margins. Wolfe sees minimal regulatory risk, given a combined domestic market share of about 3% and just one overlapping route.

The transaction, valued at less than six times Sun Country’s 2026 EBITDAR, is seen as immediately earnings accretive. Wolfe estimates a 6% initial boost, rising to 50% at full run-rate synergies. The high stock component should keep net leverage below three times, while Sun Country’s free cash flow can fund Allegiant’s aircraft orders.

Wolfe set a $108 price target, applying a 10-times multiple to its 2027 earnings estimate. The deal combines two low-utilization carriers, with revenue opportunities from expanding Allegiant’s network into Minneapolis and accessing Sun Country’s international destinations. The transaction is expected to close in the second half of 2026.