Sterne Agee Reiterates Buy Rating, $15 PT on Southwest Airlines Co. on Flat March PRASM

In a report published Friday, Sterne Agee analyst Jeffrey A. Kauffman reiterated a Buy rating and $15.00 price target on Southwest Airlines Co.

. In the report, Kauffman noted, “LUV reported March traffic results; Flat March PRASM implies lower than expected 1Q PRASM. LUV estimates that March PRASM was roughly flat YoY. Given January and February's PRASM increases of roughly 2%, this implies 1Q PRASM of about 1.3%. RPMs rose 30 bps YoY in 1Q on a 60 bps increase in ASMs, for a load factor decline of 20 bps from 77.3% in 1Q12 to 77.1% in 1Q13. We are lowering our 1Q estimate slightly from $0.03 to $0.01 on lower PRASM, offset slightly by lower fuel expense. The ~1.3% increase in 1Q PRASM is roughly 160 bps below our prior forecast of 3%. The PRASM impact is partially offset by lower fuel price, which has trended lower than our prior forecast. The net effect is a $0.02 reduction in our 1Q estimate from $0.03 to $0.01. On this basis, we are also reducing our 2013 estimate from $1.08 to $1.06.” Southwest Airlines Co. closed on Thursday at $12.57.