Goldman Sachs moved LATAM Airlines Group (NYSE: LTM) from a Buy to a Neutral recommendation on Thursday and lowered its price target to $64.10 from $66.20. At the time of the note the stock was trading at $61.23 and the company's market capitalization stood at $17.47 billion.
The downgrade was driven not by deterioration in fundamentals but by a view that the shares offer limited upside after a pronounced rally. Goldman highlighted that LATAM's stock has surged since the company was added to the bank's Americas Buy list in October 2024, reducing the scope for further gains under the firm's updated forecasts.
Independent data cited in Goldman Sachs' work and noted in market reports underscores that outperformance. InvestingPro data shows a price total return of 99.03% over the past 12 months and a 44.16% gain in the prior six months. Over a shorter window, since October 8, 2024, LATAM shares have climbed approximately 137% in U.S. dollar terms - a rise the bank contrasts with the S&P 500's 27% increase for the same period. Goldman attributes this relative outperformance to improved operational metrics following the airline's emergence from Chapter 11.
On valuation, Goldman kept its Q5-Q8 EV/EBITDA target multiple unchanged at 5.0x but adjusted its forecasted metrics, an action that produced the lower price target and a conclusion of "minimal return potential" for investors at present. LATAM's current EV/EBITDA stands at 6.67x, a level above the firm's maintained multiple. Separately, InvestingPro's Fair Value assessment suggests the shares may still be marginally undervalued relative to that measure.
The bank's analysis also recognized that the company's balance sheet already reflects favorable renegotiations completed as part of its Chapter 11 restructuring. Goldman described the operating backdrop as a "rational and stable macro environment," and noted the airline remains in a solid financial position. InvestingPro ratings characterize LATAM's overall financial health as "GREAT."
Recent corporate results add context to the conversation around valuation and rating. LATAM reported fourth-quarter 2025 financials that exceeded expectations, delivering earnings per share of $1.69 versus consensus of $1.26 - a 34.13% earnings surprise. Quarterly revenue totaled nearly $4 billion, representing a 16.3% increase compared with the year-ago quarter. The company said these results reflected meaningful growth and improved operational efficiency, outcomes that were well received by investors according to market commentary.
Taken together, Goldman Sachs' downgrade reflects a recalibration of the balance between observed operational strength and the remaining upside available to investors after an extended period of share-price appreciation. The bank's unchanged valuation multiple alongside revisions to its forecasts produced a lower target that underpins the new Neutral stance.
Key context:
- Goldman Sachs moved LATAM from Buy to Neutral and cut its price target to $64.10 from $66.20.
- LATAM's recent trading level was $61.23 and market capitalization was $17.47 billion.
- Valuation metrics: Goldman retained a 5.0x Q5-Q8 EV/EBITDA target multiple; current EV/EBITDA is 6.67x.
What this means for markets:
- Equity investors may see reduced expected returns from LATAM after a strong rally that followed its Chapter 11 exit.
- Airline and travel sector valuations are central to the assessment, as operational improvements and balance-sheet restructuring have been priced into the stock.
- Credit and debt markets may interpret the company's improved financial position and completed renegotiations favorably, consistent with the "GREAT" financial health assessment.