Market Overview

Spirit Airlines Initiated Bullish At Imperial Capital

Spirit Airlines Initiated Bullish At Imperial Capital

Although Spirit Airlines Incorporated (NASDAQ: SAVE) has a successful ultra-low cost model and among the highest pretax margins in the industry on a consistent basis, Imperial Capital’s Michael Derchin noted that the stock has declined more than 50 percent from its December 2014 highs.

Derchin initiated coverage on the company with an Outperform rating and price target of $51.

Increasing Competition

“The primary reason for the weakness in its shares, in our view, is investor concerns regarding the domestic competitive environment,” the analyst mentioned.

Over the last two years, the Big 3 airlines, along with Southwest Airlines Co (NYSE: LUV), have been matching Spirit Airlines’ ultra-low cost fares much more aggressive than in previous years.

Related Link: 15 Stocks That Rallied 4 Days, Then Sold Off Yesterday

Derchin believes the increased competition is being fueled by lower jet fuel prices, which have led to increased marginal capacity.

In addition, “the sunset of the Wright Amendment, which increased long haul capacity from Dallas Love Field,” as well as “greater focus on attracting domestic leisure customers, as domestic and international business travel demand weakened,” have also fueled competition.

Concerns Overdone

However, the analyst believes concerns regarding Spirit Airlines’ competition position have been overdone, especially given the company’s superior pretax margins against the backdrop of increased competition.

“In fact, we believe SAVE’s recent competitive experience is not dissimilar to those faced by LUV and Ryanair Holdings plc (ADR) (NASDAQ: RYAAY) during the early stages of their growth plans, which turned out to be tremendous buying opportunities at the time,” Derchin added.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for SAVE

May 2020Evercore ISI GroupUpgradesIn-LineOutperform
May 2020CitigroupMaintainsBuy
May 2020Raymond JamesDowngradesOutperformMarket Perform

View More Analyst Ratings for SAVE
View the Latest Analyst Ratings


Related Articles (LUV + SAVE)

View Comments and Join the Discussion!

Posted-In: Analyst Color Long Ideas Price Target Initiation Travel Analyst Ratings Trading Ideas General Best of Benzinga

Latest Ratings

MGNXSVB LeerinkMaintains27.0
RCUSSVB LeerinkReiterates42.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at