"Following the revision in our earnings estimates, we revised our target price to RM0.63 per share (from RM1.03 previously).
"Our revised target price is derived via pegging our FY21F EPS of 7.4sen to a target PER of 8.5x which is the lower end of the aviation cycle," it said.
The research house maintained its neutral outlook on the counter, which was last traded on March 16 at 70 sen per share.
A further decline in international passenger traffic is to be expected amid travel restrictions for outbound travel for local and inbound travel for foreigners over the coming two weeks.
For March 2020, MIDF research anticipates the drop in total passenger traffic at the airports to reach more than 30% year-on-year. The research house lowered its total passengers carried forecast for klia2 in FY20 by about 19%.
However, domestic flights will continue to operate according to airlines schedule as airports will remain open during the period.
MIDF added that the stimulus package announced by the government, which covers domestic tourism, will partially support domestic travel.
The research house said it is possible for AirAsia to redeploy its aircraft for domestic routes especially during festive seasons such as Hari Raya Aidilfitri, provided that the Covid-19 fears have waned by then.
It added that domestic travel in Malaysia could be a cushion for the additional pressure on the group from travel bans in countries such as India.