UBS U.S. Airline Sector Note: Revenue Edge - November Coming In Strong, December Looks Good Too
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Up: 13 | Down: 14 | New: 11
Rating Summary:
6 Buy, 2 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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UBS U.S. Airline Sector Note: Revenue Edge - November Coming In Strong,
December Looks Good Too
Analyst, Kevin Crissey, said, "Revenue holding up very well: So far November unit revenue (RASM) reports have been strong with US Airways (NYSE: LCC) (+13%), Southwest (NYSE: LUV) (+9%), and Allegiant (Nasdaq: ALGT)(+11%). Given stronger than anticipated load factors, we’ve increased our industry RASM forecast for November to over 11% from just over 10%. December continues to track well and still looks like 8%."
"Adjusting 2012 estimates for fuel: Although the WTI spot oil price has increased sharply to over $100/bbl, jet fuel prices are more closely associated with Brent and heating oil – and neither have increased dramatically. We’ve incorporated 6 cents per gallon higher jet fuel prices in 2012. The net result is lower EPS but not materially lower."
"Our view on the stocks: Given the strength in revenue despite economic headwinds we are feeling increasingly confident about our revenue forecasts in 2012. Fuel prices are obviously a big wildcard but we expect EPS growth in 2012 and find the stocks compellingly valued. Top pick is Delta (NYSE: DAL)."
Other stocks of note: United (NYSE: UAL), AMR Corp (NYSE: AMR), Spirit (Nasdaq: SAVE), Alaska Air (NYSE: ALK), & JetBlue (Nasdaq: JBLU)
December Looks Good Too
Analyst, Kevin Crissey, said, "Revenue holding up very well: So far November unit revenue (RASM) reports have been strong with US Airways (NYSE: LCC) (+13%), Southwest (NYSE: LUV) (+9%), and Allegiant (Nasdaq: ALGT)(+11%). Given stronger than anticipated load factors, we’ve increased our industry RASM forecast for November to over 11% from just over 10%. December continues to track well and still looks like 8%."
"Adjusting 2012 estimates for fuel: Although the WTI spot oil price has increased sharply to over $100/bbl, jet fuel prices are more closely associated with Brent and heating oil – and neither have increased dramatically. We’ve incorporated 6 cents per gallon higher jet fuel prices in 2012. The net result is lower EPS but not materially lower."
"Our view on the stocks: Given the strength in revenue despite economic headwinds we are feeling increasingly confident about our revenue forecasts in 2012. Fuel prices are obviously a big wildcard but we expect EPS growth in 2012 and find the stocks compellingly valued. Top pick is Delta (NYSE: DAL)."
Other stocks of note: United (NYSE: UAL), AMR Corp (NYSE: AMR), Spirit (Nasdaq: SAVE), Alaska Air (NYSE: ALK), & JetBlue (Nasdaq: JBLU)
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