Imperial Capital Starts Hawaiian Holdings (HA) at Outperform
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Imperial Capital initiates coverage on Hawaiian Holdings (NASDAQ: HA) with a Outperform rating and a price target of $58.00.
Analyst Michael Derchin commented, "HA is well positioned to reap the margin benefits of a balanced route network and growth opportunities ahead, in our view, having undergone a dramatic route and fleet transformation over the past ten years. HA currently controls about 90% seat share between the Hawaiian Islands after its competitors fell by the wayside, which accounted for nearly 25% of revenues as of 6/30/16. Asia/Pacific now accounts for roughly 25% of revenues as of 6/30/16 with a highly profitable Japan business accounting for nearly 60% of Asia/Pacific revenues. HA started service to Beijing in 2Q14, and China is a significant growth opportunity longer term. The remaining 50% of revenues comes from the U.S. mainland, primarily West Coast to Hawaii, where HA enjoys a PRASM premium in most markets due to its targeted services."
"As a result of favorable underlying trends in each of its three segments, we expect HA to produce industry-leading unit revenue growth in 2H16 and FY17. Although the stock has significantly outperformed its peers over the last few years, HA remains undervalued, in our view, based on higher relative margins and strong growth prospects."
Shares of Hawaiian Holdings closed at $47.60 yesterday.
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