Morgan Stanley downgraded Singapore Airlines Ltd. after a peer-beating rally over the past month, saying positives such as strong fundamentals and favorable fuel prices have been priced in.

The rating cut to equal-weight from overweight is the airlines’ first in four months since its rapid climb catapulted the stock to among the top gainers on the Bloomberg World Airlines Index this year, according to data compiled by Bloomberg. Singapore Airlines has risen 33% since May 16 after it reported record profit, driven by pent-up demand. In contrast, the Straits Times Index has advanced 1.4% in that period.

Market players remain optimistic on the firm as higher capacity and benign fuel prices will enhance margins in the current fiscal year. Still, these factors looked “played out” and the rally so far has captured these positives, analysts including Divya Gangahar Kothiyal wrote in a note Friday.

The stock has overshot a consensus estimate target price of S$6.31, according to data compiled by Bloomberg. Morgan Stanley raised its target price by 16.8% to S$7.30 after switching its valuation framework. The shares fell as much as 1.3% Friday before paring losses to 0.1%.

“Our bull case assumes cargo yields stabilize at current levels and costs remain well controlled, driving operating leverage and earnings growth of 15% in FY24,” Morgan Stanley said. “In such a scenario, the stock could continue to re-rate, and we assume a 5% premium over our base case” to a bull case of S$9.30.