U.S. Airways (LCC) got a boost today after Barclays analyst Gary Chase decided to upgrade the company’s rating to Overweight from Equal Weight. Shares jumped 10% in morning trading. Chase thinks that the market is missing some of the industry’s momentum, and now is a good time to buy a handful of airlines.
“We still like United Continental (UAL) and Delta (DAL), but also think it�s time to re-visit LCC shares, which have substantially underperformed this year. The market seems indifferent to industry improvement, but we don�t expect that indifference to last.”
United is rising 5.6% and Delta is up 3.7%.
Chase thinks the industry has held the line on capacity cuts, allowing airlines to raise prices, and revenue growth should outpace high fuel prices in 2012. U.S. Airways “has leverage to industry improvement, but also has favorable company-specific capacity dynamics as a tailwind.” With shares down 55% this year, Chase thinks investors should give the stock another look.
U.S. Airways has also been talked about as a potential partner for American Airlines parent AMR (AMR) as AMR emerges out of bankruptcy.
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