Coupled with disciplined non-fuel unit costs management, the airline waas able to post a 25.9% y-o-y increase in operating profit.
SIA reported core net profit for the quarter was $505 million, down 4% y-o-y, after taking out the one-off $1.1 billion accounting gain from the merger of Air India and SIA's then associate Vistara in November 2024.
"Given the stronger seasonality in the second half of the year, we expect momentum to carry through into 4QFY2026, underpinned by sustained travel demand and improved yield performance," state the analysts in their Feb 26 note.
As such, Liu and Ong have revised their FY2026 and FY2028 earnings forecast by 40 to 91% on the back of the stabilised pax yield, narrowing Air-India losses and positive operating leverage.
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By applying a 1.3x P/B multiple, they have derived a higher target price of $7.03, from $6.35 earlier.
Two other brokerages have raised their respective target prices for SIA as well.
Citing the better-than-expected passenger yield that has stabilised at a new equilibrium post-pandemic, Jason Sum of DBS Group Research sees a "more constructive pricing backdrop" emerging.
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"This turnaround is notable given persistent pricing pressure across the APAC region amid intensifying competition, though we note that 3Q is typically the strongest seasonal quarter," he says.
Sum adds that the airline is guiding for "stable" yields rather than a "gradual moderation", thereby supporting upward revisions to operating profit estimates of FY2026 and FY2027.
By applying a valuation multiple of 4.7x EV/Ebitda, Sum has derived a new target price of $7.50, up from $6.50.
However, he believes that much of the recovery is already priced in, and yields may "undershoot" as competition intensifies, and that "uncertainty" remains over the durability of yield strength.
For now, the 4.7x EV/Ebitda multiple, versus 4.1x of the peers across the region, appears "balanced" and therefore his "hold" call.
"While the yield landscape appears to be stabilising, we would prefer to see this sustained over subsequent quarters before turning more constructive, particularly given ongoing regional capacity additions," says Sum.
Similarly, Roy Chen of UOB Kay Hian has raised his target price from $6.16 to $7.18, while keeping his "hold" call.
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He calls the passenger yields a "positive surprise" but is disappointed by heavier-than-expected drag from Air India, with SIA's share of the red ink at $200 million instead of $100 million as he had earlier figured.
Nonetheless, Chen is cheered by SIA's strong balance sheet with a net cash position of nearly $2 billion as at the end of December 2025, which is equal to 9% of the airline's market value.
Chen says he is "overall positive" with the 3Q results and has raised his FY2026 and FY2028 earnings estimates by 1% and 18% respectively to reflect a steadier passenger yield outlook.
His revised target price of $7.18 is based on 1.36x FY2027 P/B, which is pegged to 1.5SD above SIA’s long-term historical mean P/B of 1.08x.
"Air India is a major wild card for our forecasts in the medium term. A faster-than-expected turnaround of Air India would be a key re-rating catalyst for SIA," says Chen.
SIA shares dropped 1.12% to $7.09 as at 3.14 pm.
