Allegiant gains after 3Q results and positive broker outlook; Cebu Pacific falls back to float price
Allegiant strengthened 7.8% during trade yesterday in the wake of its 3Q2010 earning release. Allegiant was the best performing airline stock in the US market after upbeat outlooks from analysts. At the other end of the spectrum, Cebu Air (-4.5%) fell sharply to finish the day's trade near its float price.
- Allegiant Travel Company's stock strengthened by 7.8% following its 3Q2010 earnings release.
- Analysts maintain a bullish outlook on Allegiant, with Hudson Securities raising its price target and reaffirming a "buy" rating.
- Dahlman Rose & Company reported that Allegiant's 3Q2010 EPS performance exceeded estimates.
- Norwegian Air and Air Arabia also experienced stock gains, while Virgin Blue managed to stabilize its share price.
- Cebu Pacific, SpiceJet, and AirAsia saw declines in their stock prices during trade.
- Allegiant is currently the most shorted airline stock, but analysts expect short covering to drive the stock higher in the coming weeks.
Analysts maintain bullish outlook on Allegiant
Hudson Securities lifted its price target on Allegiant Travel Company (+7.8%) to USD58 from USD57 and reaffirmed its "buy" rating. The stock closed yesterday at USD46.71.
In a note to clients, Hudson Securities wrote: "Since July, ALGT short interest (now at 21% and about 19 days to cover) has risen, leaving it the number one shorted airline stock. Shares are down 27% from a 52- week high on revenues that have disappointed, however, we think that likely changes. Given our upward earnings revision and our view that the Street needs to follow, we think short covering likely helps move the stock higher in the coming weeks."
Dahlman Rose & Company stated that Allegiant's 3Q2010 EPS performance of USD0.67 cents was above its estimate of USD0.65 cents and the consensus estimate of USD0.64 cents. Dahlman Rose expects growth in 4Q2010 and 1Q2011 and maintained its "hold" rating on Allegiant shares.
Norwegian (+2.0%) Air Arabia (+1.8%) were also up for the day. Virgin Blue managed to stem recent falls in its share price, adding 1.2% during trade.
South Asian LCCs mostly down during trade
Cebu Pacific (-4.5%) led LCC airline stocks in the South Asian region down on Thursday, as the shares fell sharply to PHP125.10. The company listed on Tuesday at PHP125.
Also in the Asian region, SpiceJet (-2.6%) and AirAsia (-1.2%) also lost ground for the day.
Selected LCCs daily share price movements (% change): 28-Oct-2010
Source: Centre for Asia Pacific Aviation, Yahoo! Finance & Reuters