Market Overview

Hawaiian Holdings Holds 25% Return Potential, Deutsche Bank Says In Upgrade

Share:
Hawaiian Holdings Holds 25% Return Potential, Deutsche Bank Says In Upgrade
Related HA
60 Biggest Movers From Yesterday
Goldman Sachs Clears Airline Stocks For Takeoff
Weak guidance sends Delta and peers lower (Seeking Alpha)

Hawaiian Holdings, Inc. (NASDAQ: HA), the parent company of Hawaiian Airlines, reported better-than-expected bottom-line results in the second quarter. 

The Analyst

Deutsche Bank analyst Michael Linenberg upgraded Hawaiian Holdings from Hold to Buy and increased the price target from $40 to $45.

The Thesis

Apart from the earnings beat, Hawaiian Holdings is likely to have one of the higher profit margins in its sector this quarter despite the pretax margin slipping 5.9 points year-over-year, Linenberg said in the upgrade note. (See the analyst's track record here.) 

The airline's industry-leading five-year ROIC-WACC spread is a result of Hawaiian's focus on enhancing shareholder value, the analyst said.

Q2 revenue per available seat mile trends were decent, and the airline's capacity per available seat mile excluding fuel is on an upward trajectory, Linenberg said. 

The analyst expects the company to slow its capacity growth next year from 7.5 percent to 5.5 percent and aim for flattish CASM excluding fuel.

Deutsche Bank raised its full year EPS estimate from $4.65 to $5.25. Hawaiian deserves credit for its "antitrust-immunized" joint venture with Japan Airlines, Linenberg said. Deutsche also raised its fiscal 2019 EPS estimate from $5 to $5.35. 

The joint venture should receive approval before the end of the year, the analyst said. 

"Given that implies a total return of 25 percent based on the last close of $36.35 plus a 1.3-percent dividend yield, we are raising our rating on HA shares from Hold to Buy." 

Price Action

Hawaiian Holdings shares have shed about 8 percent year-to-date.

The stock was rallying 10.59 percent to $40.20 at the time of publication Wednesday. 

Related Links:

Hawaiian Holdings Competitive Concerns Are 'Overblown'

Macquarie: United's Q2 Beat Shows Commitment To EPS Targets

Photo by Dylan Ashe/Wikimedia. 

Latest Ratings for HA

DateFirmActionFromTo
Dec 2018Morgan StanleyMaintainsUnderweightUnderweight
Dec 2018CitigroupMaintainsNeutralNeutral
Nov 2018CitigroupMaintainsNeutralNeutral

View More Analyst Ratings for HA
View the Latest Analyst Ratings

Posted-In: Deutsche Bank Michael LinenbergAnalyst Color Upgrades Price Target Travel Analyst Ratings General Best of Benzinga

 

Related Articles (HA)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
SYBXChardan CapitalInitiates Coverage On20.0
GEJP MorganUpgrades6.0
FEYEMorgan StanleyDowngrades21.0
ADCJefferiesUpgrades70.0
HTAJefferiesDowngrades0.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

CN's Second Quarter Pricing, Front And Back, Was About 4% Or More, And They're OK With That

Pivotal Downgrades Spotify, Says YouTube, Facebook Pose Threat