Allegiant Travel (ALGT) is likely to post a 15% increase in Q2 capacity, in line with guidance, Morgan Stanley said Monday in a report.

Costs may ease with an average fuel price per gallon of $2.41 in Q2 down from $2.61 in Q1 and close to guidance of $2.40, Morgan Stanley said.

Available seat miles in 2025 may trail current guidance with a 13% increase, the report said.

Morgan Stanley kept its equal-weight rating on Allegiant shares, citing the outlook for "low fares, unique domestic/medium-haul network, nimble business model and solid execution" from management. "But we believe the stock is a 'show me' story for the next couple of quarters."

Morgan Stanley cut its price target on Allegiant to $83 from $85.

Allegiant shares fell 5.6% in recent trading Monday.

Price: 56.94, Change: -3.35, Percent Change: -5.56