Deutsche Bank downgraded Frontier Group Holdings Inc (NASDAQ: ULCC) from Buy to Hold on Tuesday, while maintaining a 12-month price target of $6.00. The action took place one day before Frontier's February 11 earnings report was due.
The downgrade comes after Frontier's stock climbed roughly 35% year-to-date, markedly outpacing the S&P 500's 1.7% advance over the same stretch. Deutsche Bank characterized Frontier as one of the stronger performers inside its airline coverage, and noted that shares were trading above the bank's assessed fair value of $6.00.
Frontier's share price was indicated at $6.36 at the time referenced in the report. That level places the stock above Deutsche Bank's target and, according to InvestingPro's Fair Value model cited in the note, the company appears overvalued. The research also flagged a debt-to-equity ratio of 11.59 for Frontier.
The bank attributed part of the recent share-price strength to market expectations of a favorable domestic capacity environment in 2026 and to capacity reductions by Spirit Airlines, which Deutsche Bank identified as Frontier's largest head-to-head competitor. Based on the latest published schedules for the March and June quarters of 2026, Deutsche Bank estimated that Spirit overlaps approximately 30% of Frontier's route network.
Frontier has also been the subject of several corporate developments in recent weeks. James G. Dempsey was named President and Chief Executive Officer, with the appointment taking effect in January; he had been serving as interim CEO and has been with the company for a decade. In addition, Frontier added Anthony Salcido, a former Toyota executive, to its board of directors.
On the strategic front, Frontier has reportedly held discussions with Spirit Airlines about a possible merger as Spirit contemplates an exit route from bankruptcy. Those talks, coupled with executive changes, mark a period of active strategic consideration for the carrier.
Other analysts have taken a more cautious view. BofA Securities downgraded Frontier's rating from Neutral to Underperform, pointing to concerns about rising costs, particularly aircraft rental fees. That downgrade included a reduced price target and reflects the firm's expectation that cost pressures could increase in the coming years.
Taken together, the analyst actions and corporate developments create a mixed picture for Frontier: strong recent share-price performance and board-level changes on one hand, and heightened valuation and cost concerns on the other. Investors will have the opportunity to weigh these factors as Frontier reports earnings on February 11.
Sectors affected: airlines, travel, capital markets.