Upgrading LATAM (LTM) to Strong Buy - A Tactical Long with Clear Entry, Stops and Targets

Hook / Thesis

I am upgrading LATAM Airlines (LTM) to Strong Buy. The share price is trading around $62.6 (last quote ~ $62.64) as of 02/10/2026 after a recent pullback from the high-60s. That pullback, in my view, creates a better risk/reward for a disciplined long: LATAM reported q4/2025 revenue of $3,874,676,000 and is executing a clear fleet and capital-return story (including a 10-aircraft 787 order and resumed dividends in 2025). Put simply: demand is strong, the company has options to grow long-haul capability, and management is returning cash to shareholders. Those three variables - demand, fleet investment, and capital returns - are enough to justify upgrading to Strong Buy with an actionable entry/stop/target plan below.

This is a trade idea - not a buy-and-forget investment. I lay out precise entry bands, a stop-loss, 2 target levels and what developments would change my view.

What LATAM Does and Why It Matters

LATAM is the largest airline group in Latin America, with core operations across Brazil, Chile, Peru, Colombia and Ecuador, and meaningful revenue exposure to the U.S. and Europe. The business mix includes passenger (domestic/regional and long-haul) and cargo operations using both belly space and dedicated freighters. The company also offers ground handling, courier, logistics and maintenance services.

Why the market should care now:

• Demand normalization and pricing tailwinds. Global and regional leisure and corporate travel are not only recovered but still tightening capacity vs. demand on key routes. Strong 4Q/2025 revenue of $3.875B illustrates the underlying volume and yield strength the market is paying for.
• Fleet refresh/expansion. LATAM has announced a material order for 10 Boeing 787s (reported 10/28/2024). Those widebodies are purpose-built for Latin America - long-haul routes to the U.S., Europe and Asia - and they materially improve unit economics and range compared with older types.
• Capital returns have restarted. The company declared $1.0097 per share on 04/03/2025 and $1.4006 on 12/05/2025 (paid in 2025/2026), signaling management confidence in cash flow and a willingness to return excess cash to shareholders after the recovery.

Evidence from the numbers

Use the concrete data point: q4/2025 revenue was $3,874,676,000. If that quarter is representative, a simple annualization implies revenue run-rate near $15.5B (4 x q4), putting LATAM firmly in the large-cap airline revenue bucket. Operationally, the market is already pricing improved fundamentals into the stock: the 52-week trading range shows a low around $27.13 and a high approaching $70.42, reflecting a more than doubling from the cyclical trough into the recent rally.

The market snapshot (as of 02/10/2026) shows last trade prints around $62.40 and last quote price $62.64, down roughly 3.8% intra-day from a prior close near $64.85. That intraday weakness looks tactical rather than structural, given the underlying revenue and the resumption of dividends.

Valuation framing

The dataset does not include a market capitalization or consensus earnings multiple to plug in here, so valuation needs to be framed against the company's recent price action and operating momentum. The stock has moved from the low-$30s to the low-$60s over the trailing year; that re-rate is consistent with the revenue acceleration and visible capital returns. In absence of peer multiples in the dataset, my valuation view is qualitative:

• If LATAM sustains q4-level quarterly revenue and converts a reasonable share of that into free cash flow (helped by higher-margin long-haul routes and cargo), the current price band around $60-65 looks modest relative to the upside potential once the new 787s shift mix toward higher-yield routes.
• Conversely, the stock already discounts a meaningful recovery. The trade is therefore about execution: fleet delivery cadence, route yield improvement, fuel and FX management, and continued capital returns.

Catalysts (what to watch)

• Fleet deliveries and deployment: execution and timing of the 10 Boeing 787s (news item 10/28/2024) - faster/earlier deliveries and profitable redeployments to transatlantic/transpacific routes would be positive.
• Quarterly results / revenue cadence: follow-up quarters that keep revenue near the q4/2025 level (~$3.875B) or better; earnings beats on yields and unit revenue.
• Continued or enlarged capital returns: additional dividends or buybacks beyond the 04/03/2025 ($1.0097) and 12/05/2025 ($1.4006) declarations would re-rate multiple.
• Cargo strength and yield improvement during seasonal travel peaks (e.g., Travel Tuesday / holiday sales trends) that translate into higher margins.

Trade plan - actionable

My tactical trade plan is intended for a risk-aware, position-sized long. This trade assumes a central case of continued demand and disciplined fleet deployment. Adjust size depending on portfolio volatility tolerance. All prices are US dollars and based on the market snapshot near $62.6 on 02/10/2026.

Positioning note: consider scaling in (initial smaller size at entry band, add on confirmed weakness or positive catalyst). Use a strict stop and adjust trailing stop once Target 1 is reached.

Risks and Counterarguments

No trade is without risk. Below are the primary risks I'd monitor that could invalidate this upgrade.

• Fuel and input-cost shock. A sudden, sustained rise in jet fuel or other input costs that outpaces hedges would compress margins and cash flow.
• Macro / demand downturn. A slowdown in discretionary travel or a regional recession in LATAM could pull yields down and weigh on unit revenue.
• Execution risk on fleet. Delays or higher-than-expected costs for the 787 deliveries would postpone the higher-margin long-haul mix and hurt expected synergies.
• Currency volatility. LATAM generates a lot of revenue in local currencies; volatile FX can both inflate costs and complicate debt servicing.
• Competition and capacity overhang. Aggressive capacity added by low-cost carriers on key domestic routes could compress yields, especially on short/medium-haul flights.
• Regulatory / legal risk. Any regulatory action in core markets or international disputes around traffic rights could impair route economics.

Counterargument: The consensus bear case is that much of LATAM's post-pandemic recovery is already priced in and that the company remains exposed to cyclicality in travel and commodity costs. That is fair. My upgrade rests on the assumption that LATAM can convert current revenue traction into durable cash flow growth (helped by better long-haul unit economics from new 787s and a rebounding cargo business). If revenue or margin trends roll over, the valuation upside evaporates and I would swiftly downgrade.

What would change my mind

• I would downgrade if quarterly revenue falls meaningfully below q4/2025 levels (sign of demand weakness) or if margins compress for two consecutive quarters.
• Missed or materially delayed 787 deliveries or indications the fleet plan is uneconomic would also be a downgrade trigger.
• Conversely, sustained dividend increases or repurchase programs and consistent quarter-over-quarter FCF growth would further reinforce the Strong Buy call.

Bottom line

LATAM is, in my view, an underappreciated play on sustained travel demand, a managed fleet refresh and the return of capital. The company posted q4/2025 revenue of $3.875B, has announced a strategic Boeing 787 order that improves long-haul capability, and management has restarted significant dividends in 2025. Those items are concrete, measurable improvements versus a few years ago.

That said, the trade requires discipline. Use the entry band ($60-$64), strict stop ($50-$52), and scale toward targets of $80 and $95 while watching the catalysts above. Position size to accommodate airline volatility and reconsider the thesis if revenue or fleet execution falters.

Disclosure: This is not financial advice. I am presenting a trade idea based on the public information available as of 02/10/2026 and a rules-based trade plan; investors should size positions according to personal risk tolerance and conduct their own due diligence.

Key datapoints referenced in this note: q4/2025 revenue $3,874,676,000; recent dividend declarations on 04/03/2025 ($1.009724) and 12/05/2025 ($1.400554); Boeing 787 order reported 10/28/2024; last quotes near $62.6 on 02/10/2026; 52-week range roughly $27.13 - $70.42.