Spirit Shares Rally Following Credit Suisse's Upgrade To Outperform

Spirit Airlines Incorporated SAVE shares closed Monday's session up more than 3 percent as Credit Suisse analyst Julie Yates earlier upgraded the stock to Outperform.

Yates previously had a Neutral rating on shares of Spirit. The analyst's price target was raised from $44 to $55.

Despite the more positive recommendation and price target, she reduced earnings estimates for Spirit across the board:

  • FY16 EPS estimate lowered from $3.82 to $3.67;
  • FY17 from $4.34 to $4.23; and
  • FY18 from $5.64 to $5.47.

Yates said her target is now based on a 13x multiple to FY17 expected earnings.

"Even with higher fuel, we expect SAVE to grow earnings by 15% in 2017 which is unique among our coverage. Southwest Airlines Co LUV is the other carrier where we see EPS growth in 2017 despite higher fuel. Both SAVE & LUV are overearning less than peers on low fuel, but for different reasons; SAVE's is from yield weakness resulting from competitor actions where LUV's is from hedging losses," Yates said.

Shares of Spirit closed Monday at $43.85, a price which suggested about 25 percent possible upside to the Credit Suisse price target.

date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorNewsUpgradesPrice TargetAnalyst RatingsAirlinesIndustrials
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...