Barclays on U.S. Airlines: Recent Oil Decline May Give Slight Push, But Don't Expect Windfall

June 8, 2012 12:45 PM EDT Send to a Friend
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Barclays on U.S. Airlines: Recent Oil Decline May Give Slight Push, But Don't Expect Windfall

Analyst, David E. Fintzen, said, "We now see increased risk to revenue, if not the likelihood that oil could easily recover should revenue in fact hold firm. Long-term, we like the industry's earnings growth potential and still see a compelling opportunity in airlines shares, but lower oil admittedly raises the risk of near-term disappointment. As a result, we re-order our top picks (now Southwest (NYSE: LUV), Spirit Air (Nasdaq: SAVE) and Allegiant Travel (Nasdaq: ALGT)) to emphasize a measure of defensiveness to our positive view."

"We remain 1-Overweight on both Delta (NYSE: DAL) and U.S Airways (NYSE: LCC), but would wait to be aggressive buyers on the back of any industry revenue disappointment."

Recently, Barclays upgraded LUV to Overweight (on April 4, 2012) and sees continuing improvement in RASM trends.

The firm maintains an Overweight rating on ALGT, raises price target from $75 to $80, FY12 EPS estimate from $4.15 to $4.35 and FY13 from $5.25 to $5.90.

Delta (NYSE: DAL) remains Overweight rated, PT raises from $14 to $15, FY12 EPS estimate from $2.30 to $2.45 and FY13 from $2.80 to $3.25.

For JetBlue, Barclays maintains an Equalweight rating, bumps price target up $1 to $6, FY12 EPS raised from $0.47 to $0.62 and FY13 from $0.55 to $0.75.

For Overweight rating Southwest (NYSE: LUV), Barclays raises PT from $29 to $32, FY12 EPS estimates from $1.85 to $2.05 and FY13 from $2.35 to $2.60.

Equalweight rating United Continental (NYSE: UAL), price target raised from $27 to $29, FY12 EPS estimates from $3.90 to $4.30 and FY13 from $6.05 to $6.70.

US Airways (NYSE: LCC) is Overweight rating, PT raised from $12 to $15, FY12 EPS estimate bumped from $2.40 to $3.05 and FY13 from $3.10 to $4.10.

For Equalweight rating Alaska Air (NYSE: ALK), Barclays leaves its $48 price target, but raises FY12 EPS estimate from $4.50 to $4.90 and FY13 Earnings estimates from $5.55 to $5.60




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