Stifel’s Joseph DeNardi explains why he upgraded shares of Southwest Airlines (LUV) to Buy from Hold:
We believe the recent pullback in airline share prices offers an attractive entry point as we expect the focus to shift away from the negative data points of Lufthansa and Iraq towards the strong performance airlines are likely to report over the next few quarters. Out of the companies we cover that are Hold rated, we view Southwest as best positioned to benefit from this dynamic given that (1) it has the highest exposure to the strong domestic pricing environment and (2) no direct risk related to the revenue uncertainty associated with the Pacific and Atlantic markets. As a result, we are upgrading shares to a Buy rating and a $30 target price which is based on shares trading at roughly 15x our 2015 EPS estimate or 7x on an EV/EBITDAR (FY2) basis.
Southwest now joins United Continental (UAL), American Airlines (AAL) and Delta Air Lines (DAL), among others, as Buy-rated carriers at Stifel.
Shares of Southwest Airlines have gained 1.6% to $26.52 at 11:39 a.m. today, while United Continental has risen 0.7% to $42.84, American Airlines has advanced 1.5% to $41.67 and Delta Air Lines is up 1.3% to $39.35.
No comments:
Post a Comment