Alaska Air Group (ALK) faces key debate heading into its analyst day whether its recent profit and loss challenges are driven by transitory issues, such as higher jet fuel costs, integration disruptions, and unfavorable weather in Hawaii, or whether structural issues could weigh on profitability over the long term, UBS Securities said in a note Tuesday.

Alaska Air is holding an investor day presentation in Seattle on Sept. 29.

The firm said it expects the company to offer an update on Q3, guide Q4 and highlight initial thoughts on 2027 at its upcoming analyst day.

The brokerage believes the company's profitability can meaningfully improve if the macro stabilizes. In the near-term, higher oil prices are likely to pressure Alaska Air's profits given its high earnings sensitivity to jet fuel, according to the note.

Meanwhile, the firm said it suspects that the company might not provide fiscal 2027 earnings per share outlook given the recent volatility in fuel. It also expects Alaska Air to reiterate its long-term forecast of $10+ in EPS.

UBS kept a buy rating on Alaska Air and raised its price target to $54 from $52.

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