Frontier Group Holdings' (ULCC) price point and customer base will likely be viewed by the Street as the "most economically vulnerable," Morgan Stanley said in a note Monday.

The investment bank said signs of improvement early this month like its peers as seasonality gains steam and expected capacity declines in H2 led by off-peak flying cuts provide some good news.

"Risk and reward are both high here and we may not get concrete evidence that normalized EPS is over $1 until 2026," Morgan Stanley said.

The firm said that for now, it continues to see better risk-reward elsewhere in the group.

Morgan Stanley cut its price target on Frontier Group to $9 from $10 and kept its equalweight rating.

Price: 4.11, Change: -0.06, Percent Change: -1.56