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Investing.com - Goldman Sachs downgraded Volaris (NYSE:VLRS) to Neutral from Buy and lowered its price target to $7.60 from $11.70, analyst Bruno Amorim said. The stock currently trades at $7.72, with analyst targets ranging from $5.30 to $15.
The firm cut its price target for the Mexican stock to MXN 13.70 from MXN 21.10 previously. Goldman Sachs maintains its Q5-Q8 EV/EBITDA multiple at 4.0x.
Since being added to the Americas Buy list on September 30, 2020, Volaris shares fell 7% in U.S. dollar terms and 16% in Mexican peso terms, compared with gains of about 103% for the S&P 500 and 88% for the IPC Bolsa Index over the same period. The underperformance stems from Pratt & Whitney engine groundings that reduced capacity and several instances of higher jet fuel prices pressuring margins.
Low cost carriers could face higher demand elasticity for price increases in the context of macroeconomic volatility and higher jet fuel prices, given their lower-income client profile and slightly higher jet fuel exposure compared with full-service carrier names in Goldman Sachs coverage, the analyst said.
Volaris has the highest leverage within Goldman Sachs coverage at about 2.9x 2027 estimated Net Debt/EBITDAR and should face the highest cash burn in 2026 from a higher jet fuel price environment, the firm said. The company’s debt-to-equity ratio stands at 14.66, while its current ratio of 0.73 indicates short-term liquidity pressures. For deeper analysis of Volaris’s financial health and access to exclusive Pro Research Reports covering this and 1,400+ other US stocks, visit InvestingPro.
In other recent news, Volaris reported its fourth-quarter 2025 earnings, which fell short of analysts’ expectations. The company announced earnings per share (EPS) of $0.04, significantly below the anticipated $0.26. This represents an 84.62% negative surprise for investors. However, Volaris did achieve a 5.6% increase in revenue compared to the previous year, bringing in $882 million. Despite the revenue growth, the earnings miss was a notable development for the company. These recent developments have drawn attention from analysts and investors. The earnings report highlights the challenges faced by Volaris in meeting market expectations.
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