TD Cowen moved Sun Country Airlines Holdings (NASDAQ:SNCY) from a Buy to a Hold rating and trimmed its price target to $18.00 from $21.00 on Tuesday, citing merger-related pricing in the stock and modest changes to near-term financial estimates.
The research note highlighted that Sun Country’s shares appear to be pricing in greater than a 90% probability of merger approval with Allegiant Travel Company. TD Cowen and InvestingPro data point to implied consideration of roughly $18.47 based on Allegiant’s share price, compared with $18.89 at the time the transaction was announced. Sun Country’s trading level of $18.04 is consistent with those market-implied expectations.
Despite the downgrade, the firm acknowledged Sun Country’s strong underlying financial profile. InvestingPro data show the carrier holds a Piotroski Score of 9, indicating a high degree of operational efficiency by that measure. InvestingPro also notes the stock has produced substantial price momentum recently, with a 75% return over the past six months.
TD Cowen adjusted its forecast for Sun Country’s fourth quarter 2025 adjusted earnings per share to be 2 cents below consensus, attributing the gap in part to impacts from the government shutdown. The firm also projects first quarter 2026 adjusted EBIT margin to be about 1 percentage point below consensus.
Looking ahead to Sun Country’s upcoming results, the airline is scheduled to report fourth quarter 2025 results on February 4. Based on TD Cowen’s current estimates, expected guidance for first quarter 2026 could include revenue growth in a 1% to 5% range, block hour growth of roughly 5% to 8%, and an adjusted EBIT margin between 15% and 18%.
TD Cowen signaled high conviction that the pending merger with Allegiant will secure approval later this year, and noted that Allegiant’s stock price implies a takeout price in the neighborhood of $18.47. The research firm’s change in recommendation reflects the view that meaningful upside is constrained when the market is already assigning a high probability to the deal closing at the implied consideration.
The merger between Sun Country and Allegiant is structured as a cash-and-stock transaction. Under the announced terms, Sun Country shareholders will receive $4.10 in cash plus 0.1557 shares of Allegiant stock for each Sun Country share held. The announcement prompted other broker adjustments: Wolfe Research lowered its rating on Sun Country from Outperform to Peerperform, while JPMorgan downgraded the stock from Overweight to Neutral, citing the merger among the factors behind their revisions.
Separately, Sun Country disclosed operational and financial leadership developments. The carrier said it will open a new operating base at Cincinnati/Northern Kentucky International Airport, primarily to support cargo operations for Amazon. In accounting leadership, Sun Country appointed Christopher Mangione as chief accounting officer, succeeding D. Torque Zubeck, who had been serving in an interim capacity. The company also confirmed that its prior chief accounting officer, John Gyurci, will depart in November 2025 and that his exit was not the result of any disagreement with the company.
Investors seeking deeper financial detail have access to a Pro Research Report that covers Sun Country and more than 1,400 other U.S. equities, according to the information provided alongside the research commentary.
Context and takeaway
TD Cowen’s downgrade and lower target reflect two intertwined dynamics noted in its research: market pricing that already incorporates a high probability of the Allegiant takeover, and modest downward adjustments to near-term earnings and margin estimates driven by known factors such as the government shutdown. Other brokers have moved their recommendations in the wake of the transaction announcement, and Sun Country continues to pursue operational initiatives, including a new cargo-focused base and a settled accounting leadership succession.