Evercore ISI Upgrades American, Spirit Airlines

  • Evercore ISI analyst Duane Pfennigwerth upgraded Spirit Airlines Inc SAVE to Outperform from In-Line and a price target of $28, an upside of 19%.
  • Pfennigwerth says Spirit shares have declined over 40% since late April, over which time the FY22 consensus EPS forecast has moderated from over $2 per share to 30c.
  • While noting "it will take some time to work out," Pfennigwerth said he will "take the over."
  • Pfennigwerth believes, following Spirit Airlines' challenges this summer, it will likely take a more conservative approach to future peak periods until productivity normalizes. He expects company execution and demand to improve.
  • Duane Pfennigwerth upgraded American Airlines Group Inc AAL to In-Line from Underperform with a price target of $17, a downside of 6.8%.
  • Pfennigwerth mentions, the shares have declined 15% since Thanksgiving. His thesis on the airlines is that the pandemic will eventually end and that behavior will normalize.
  • The analyst says, while American has a heavier net debt profile than its peers, it also has a lower cap-ex spending plan over the next three years, and net debt should decline when cash generation improves.
  • Price Action: SAVE shares are trading higher by 9.73% at $23.58, and AAL higher by 9.69% at $18.23 on the last check Monday.
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