Virgin America Inc. is Flying High after Stellar Earnings

Virgin America Inc.

reported fourth quarter earnings on Wednesday that beat analyst estimates. Revenue for the quarter came in at $372.2 million versus the consensus estimate of $370.57 million. EPS was $1.16, $0.37 better than the analyst estimate of $0.79. While analysts mainly cite the fall in fuel prices as driving Virgin America's increase in earnings, they also note that the company's saw growth in revenue that can be attributed to their new co-branded credit card agreement that was implemented in early 2014. Several banks reacted to the airline's earnings. 1. CRT Capital: "By offering a consistently high quality of service, VA is attracting higher fare paying, value conscious customers from the booming, high tech regions of the United States." However analyst Michael Derchin believes that increasing competition along popular and profitable routes may hurt the airline in the long run. 2. Imperial Capital: "The airline has demonstrated head-to-head successes against legacy and traditional low cost airlines in both transcon and short haul markets. We believe the company's ability to garner a revenue premium vs. peers will persist as VA continues to add new markets, including Dallas to Austin, announced on 2/18/15." 3. Deutsche Bank: " We expect Virgin to benefit from a continuation of healthy overall domestic demand trends, a cleaner balance sheet, the maturation of its latest service/market additions (i.e. 12%-15% of its network is estimated to be new/in development phase), as well as enhanced ancillary pricing technology." CRT Capital rates Virgin America Inc. as a Buy with a price target of $42. Imperial Capital rates Virgin America inc. as Outperform with a $52 price target. Deutsche Bank rates Virgin America Inc. as a Buy with a $44 price target. Virgin America Inc. is currently trading at $36.05 up 0.95 percent.