Barclays On Spirit Airlines: 'Tough Guide, But Still Believers'

In a report published Thursday, Barclays analysts maintained an Overweight rating on

, while reducing the price target from $110 to $105. Spirit Airlines' industry leading profitability levels are largely driven by the company's novel approach towards revenue and low costs. The analysts believe that the "SAVE thesis of high growth, high returns at a reasonable multiple remains very much intact." Spirit Airlines guided to lower-than-expected 2Q operating margin besides trimming its FY15 margin guidance. "The margin guide was narrowed to 24-27% from 24-29%, reducing the mid-point of margin guide ~100bps (fuel accounting for ~50bps at +4-5c)," the report stated. "We reconcile our reduced TRASM outlook to the bigger drag of new markets. The ~3.5pts of ‘fare compression' is looking less SAVE-specific," the analysts pointed out. The EPS estimates for 2015 and 2016 have been reduced from $5.45 to $4.95 and from $5.75 to $5.0, respectively.