Analyst Expects Republic Airways (RJET) to Sell or Spin-Out Frontier in Coming Months

January 8, 2013 9:03 AM EST Send to a Friend
Get Alerts RJET Hot Sheet
Price: $10.90 +3.71%

Rating Summary:
    3 Buy, 4 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 37 | Down: 17 | New: 30
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Imperial Capital boosted its price target on Outperform-rated Republic Airways (NASDAQ: RJET) from $9 to $11 and raised 4Q12 and 2013 EPS estimates to $0.34 and $1.69, respectively, from $0.16 and $1.26

The new price target is based on a a sum-of-the-parts analysis of its two businesses.

"Based on RJET's comments and disclosures, we continue to believe Frontier will either be spun out or sold in coming months. We believe Frontier and the Republic unit will be viewed as more valuable trading separately than the combined RJET today. We believe the RJET management team is keen to return to its core operating business of contract flying. Contract flying entails less risk and volatility, and has generally commanded a higher multiple. In 2007, RJET, pre-Frontier, traded at 9x forward estimates. Given the likelihood of a transaction, a sum-of-the-parts valuation is not merely an exercise, but a likely occurrence, in our view."

For an analyst ratings summary and ratings history on Republic Airways click here. For more ratings news on Republic Airways click here.

Shares of Republic Airways closed at $7.49 yesterday.


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