Deutsche Bank Upgrades Hawaiian Holdings To Buy

Deutsche Bank issued a report on Hawaiian Holdings Inc. HA after the company reported strong earnings. The firm upgraded Hawaiian Holdings from Hold to Buy and raised their price target from $35 to $40.

Analysts Michael Linenberg and Richa Talwar wrote, "The combination of modest capacity growth, moderation in the decline of fuel surcharges, and stabilization of key currencies are all contributing to much better than expected RASM trends in 2016. As such we are raising our EPS estimates."

Deutsche Bank highlighted two key catalysts that can drive the company's shares higher in 2016.

1. Profitability

Analysts noted that this past December quarter was the company's best month for premium economy seat sales, which are priced at a higher margin than regular economy seats. Sales for the quarter totaled over $40 million and if this trend continues analysts expect Hawaiian Holding's profit margins to expand.

2. Top line growth

Deutsche Bank highlighted that sales of the company's value-added products were strong in the quarter. These include Hawaiian's credit card miles, which reward customer loyalty and have shown the ability to drive customer satisfaction and increase travel. Going forward, if Hawaiian Holdings can leverage its existing sales platform, it has the potential to take advantage of low oil prices and drive top line growth.