19-Aug-2009 3:50 PM

Continental and American Airlines lead rebound in stocks; GOL rallies after analyst upgrade

After heavy falls on Monday, North and South American carrier stocks rebounded modestly on yesterday (19-Aug-09), as broader stock indexes, including the Dow (+0.9%) rose, due to better than expected earnings reports by some retailers and improved housing market figures.

As a result, the AMEX Airline Index (+2.5%) was up, despite an increase in oil prices (+3.7%), to USD69.19.

GOL (+9.6%) rallied on the day, as a result of Banco Santander SA raising its rating on the stock to “hold” from “underperform”.

Several North American carriers also witnessed stock price increases on Tuesday, following a raising of target prices by UBS, due to better than expected Jul-2009 and Aug-2009 revenues, and expected narrower losses for 2009. Stock price recommendations were as follows:

American Airlines (+3%): to USD5.50 from USD4.75 – rating neutral;
Continental Airlines (+3.1%): to USD13.00 from USD9.00 – rating neutral;
Delta Air Lines (+2.3%): to USD10.00 from USD7.00 – rating buy;
US Airways (+0.7%): to USD3.25 form USD2.75 – rating neutral;
United Airlines (+2.5%): to USD6.50 from USD4.00 – rating neutral;
Southwest Airlines (+1.4%): to USD9.50 from USD7.00 – rating neutral;
AirTran (+0.3%): to USD7.75 from USD7.50 – rating buy.

Copa Holdings (+3.3%) was also up, potentially as a result of being listed on Cabot Wealth Advisory’s Top Ten report, stating the carrier has a record of good growth.

North & South America selected airlines daily share price movements (% change): 18-Aug-09

Allegiant (-1.7%) was the only carrier ending the day down, after SmarTrend stated it was bearish on the company’s shares on 17-Aug-09, with Allegiant stocks currently below its 50-day moving average of USD40.32 and 200-day moving average of USD41.08. The company’s share price has been slowly declining since the end of Jul-2009.

Allegiant shares: 14-May-09 to 17-Aug-09