Deutsche Bank Reviews 3 Airliners

Analysts at Deutsche Bank recently took an in-depth post-earnings look at three airline stocks and gave their updated outlook for the names. Here’s a breakdown of what they had to say.

Southwest Airlines Co LUV
Southwest just reported diluted earnings per share (EPS) of $0.66, beating consensus estimates of $0.65 and Deutsche Bank estimates of $0.64. Analysts like the company’s 17.4 percent operating margin in Q1, a 1.16 percent increase year-over-year (Y/Y).

Analysts are watching for an announcement of a new shareholder return program from Southwest, as the company has pledged in the past to pay out “over 50%” of its annual free cash flow to shareholders. The company produced $859 million in free cash flow in Q1.

Deutsche Bank has a Buy rating on Southwest and a $60 target for the stock.

United Continental UAL
United reported a record Q1 profit and pretax margins of 6.8 percent for the quarter. In addition, the company’s latest guidance calls for up Q2 pretax margins of up to 14 percent.

“However, investors appear to be concerned with PRASM guide of down 4%-6%,” analysts add.

Deutsche Bank has a Hold rating on United and a $70 target on the stock.

Hawaiian Holdings Inc HA
Hawaiian reported blowout diluted EPS of $0.38, handily beating consensus estimates. In addition, the company reported that it had achieved its goal of sub-4.0X leverage by reducing leverage from 4.2X to 3.6X. Hawaiian also announced a new $100 million share buyback plan.

Deutsche Bank has a Buy rating on Hawaiian and a $33 target on the stock.