Shares in AirAsia Bhd, Southeast Asia's biggest budget airline by passenger traffic, were down in early trading on Thursday after the company's quarterly profit fell sharply.
Late on Wednesday, the airline reported a 39.23 percent drop in first-quarter profit, hurt mainly by higher finance costs and a foreign exchange loss on borrowings.
Kenanga Research said the results were within its expectations and reflects a seasonally slower part of the year. The research house expects better earnings in coming quarters.
"We would expect better earnings from AirAsia in the upcoming quarters due to public holidays, post effect from the recently concluded election and also positive from its associates," it said in a research note on Thursday.
Kenanga downgraded AirAsia to "market perform" from "outperform", but raised the target price to 3.36 ringgit per share from 3.23 ringgit.
Earlier this month, AirAsia said its passenger numbers in the quarter were up 19 percent at some 9.8 million.
At 0931 (0131 GMT) shares in AirAsia were down 0.31 percent at 3.23 ringgit, while the benchmark composite index was up 0.06 percent at 1785.09
(Reporting by Siva Sithraputhran in Kuala Lumpur; Editing by Prateek Chatterjee) (firstname.lastname@example.org; Reuters Messaging: Siva.email@example.com)