UBS: Raises Cathay Pacific target price to HK$20.1, maintains "Buy" rating.

UBS published a report arguing that Cathay Pacific's recent share price weakness reflects market concerns over fuel costs, but the market underestimates the durability of its return on equity. Cathay Pacific's ROE has consistently remained at 19% over the past three years, and its interim results for the first half of 2026 also show that its pricing power in both passenger and cargo segments is superior to peers, with core profit growing 45% year on year amid a high oil price environment. The bank believes there are at least seven structural drivers supporting more durable and sustainable ROE for Cathay Pacific, including wide-body aircraft shortages constraining supply, its market share at Hong Kong International Airport rising from 49% in the first half of 2018 to 65% in the first half of 2026, relaxation of fuel surcharges, loyalty program reform, investment in premium products, Hong Kong demand factors providing support, and long-term growth opportunities in the cargo business. The bank raised its target price from HK$19.4 to HK$20.1 and maintained its "Buy" rating.