KUALA LUMPUR: Maybank KE Research has upgraded AIrAsia to Buy from Hold with a raised target price of RM3.25 on positive earnings revision.

"Our target price is premised on an unchanged 11 times FY15 PER, which is on par with global peers," it said in a note on Monday.

It said for average jet fuel price and US$/RM in 2015 has been revised to US$100/bbl (from US$115/bbl) and 3.50 (from 3.32). 

"These are highly favourable parameters for AirAsia and form the basis of our earnings and call upgrades," it said.

RHB said AirAsia will deliver solid earnings from 2Q15 onwards as the benefit of lower fuel price trickles in. 

4Q14 and 1Q15 earnings growth will be more modest as it is saddled with fuel hedges locked in at higher than market prices (43% in 4Q14 and 40% in 1Q15; both at US$118/bbl). 

The weaker RM against US$ will offset some of the benefit as 60%-70% of its operating costs are denominated in US$. On a net basis, it is still favourable and we raise our FY15-16 earnings by 24.4% and 11.2%. 

It said the weaker RM against US$ will offset some of the benefit as 60%-70% of its operating costs are denominated in US$. 

"On a net basis, it is still favourable and we raise our FY15-16 earnings by 24.4% and 11.2%," it noted.