Hawaiian Holdings Competitive Concerns Are 'Overblown'

Hawaiian Holdings, Inc. (NYSE: HA) shares plummeted after a second-quarter earnings miss.

The miss didn't deter imperial Capital, however, maintaining its Outperform rating and $74 price target, while raising its Q3 EPS estimates on higher unit revenues and lower jet fuel prices.

According to analyst Michael Derchin, recent competitive capacity concerns facing Hawaiian airlines are overblown and the airliner is likely to grow RASM and Earnings in FY2018.

New routes to Hawaii opened up by United Continental Holdings Inc (NYSE: UAL) are from Denver and Chicago hubs, which Hawaiian doesn't serve directly.

“Hawaiian airlines withstood a significantly more intense competitive situation from Delta Air Lines and Alaska Air Group, Inc. (NYSE: ALK), which were battle for Seattle in FY15,” said Derchin.

Buckingham Research was also undeterred by Hawaiian’s earnings miss, maintaining its Buy rating on the stock athough it did trim its price target from $65 to $61.

Hawaiian Airlines is in the process of introducing premium seats that include extra-comfort and lie flat seatings, expected to hit a critical mass and impact RASM materially in Q1 2018, according to Buckingham analyst Daniel McKenzie.

The firm was a bit more cautious due to the expectation that Southwest Airlines Co (NYSE: LUV) has plans to enter the Hawaii market, given its recent international expansion.

Shares of Hawaiian Holdings were down about 7 percent on Wednesday.