New York, September 21 (FinanceEnquiry.com) – Analyst Michael Linenberg at Deutsche Bank Securities reports on Airlines – September quarter preview of 2012
In a research note published on September 20, the analyst mentions that target price of Allegiant Travel Company {(NASDAQ: ALGT) (Buy)}, United Continental Holdings, Inc {(NYSE: UAL) (Buy)}, US Airways Group, Inc {(NYSE: LCC) (Buy)} have been reduced from $90 to $80, from $31 to $30 and from $20 to $18, respectively.
Furthermore, given the margin compression from increasing fuel prices and slowing unit revenue (RASM) growth, earnings outlook of September quarter for the industry has also been lowered. In opposition to the previous forecast of $2.3 billion, net profit for the quarter of September is now expected to be $1.9 billion
In addition to this, in spite of an alike slow-moving economic backdrop exacerbated by elevated fuel prices, the new forecast particularly surpasses $1.8 billion net result of last year. On the latest run-up in fuel prices and a softening revenue environment, EPS outlook for September quarter and 2012 has been slashed by 15 percent and 12 percent, respectively,
Furthermore, estimates of September quarter for Alaska Air Group, Inc (NYSE: ALK) and Delta Air Lines, Inc (NYSE: DAL) were lowered by just 5 percent, for SkyWest, Inc (NASDAQ: SKYW) and Hawaiian Holdings, Inc (NASDAQ: HA) were unaffected and for Republic Airways (NASDAQ: RJET) were raised by 10 percent. EV or EBITDAR is the preferential valuation metric. Moreover, geopolitical risk and volatility of fuel price have been comprised in the key risks, the analyst adds further.
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