Buckingham Anticipates Takeoff In Spirit Airlines Shares

Spirit Airlines Incorporated SAVE picked up a sell-side bull in Buckingham Research Group Wednesday. 

The Analyst

Buckingham Research Group's Daniel McKenzie upgraded Spirit Airlines from Neutral to Buy and lifted the price target from $42 to $52.

The Thesis

“We have increased comfort with margin execution, aided in part by easing competition and slower growth, which in turn should drive better sentiment and a modest re-rating of the stock, which is the basis for our improved valuation,” McKenzie said in the Wednesday upgrade note. (See the analyst's track record here.) 

Both non-fuel cost performance and an improved supply and demand element in key markets underpin Buckingham's optimistic projections for Spirit, the analyst said. 

The better cost performance should be sustainable, as seen in a new pilot deal and other recent business endeavors, according to Buckingham. 

McKenzie’s new price target comes after a 15-percent pop in share price and Spirit's positioning to execute on pretax earnings growth, he said. 

The Buckingham analyst addressed trade concerns in the note. Investors seeking exposure to airlines will likely select carriers with largely domestic exposure, McKenzie said.

"Just 10 percent of SAVE's flying is international," the analyst said. 

Price Action

Spirit shares were up 0.57 percent at $40.80 at the time of publication Wednesday. 

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