North and South American carriers’ stocks rebounded on Tuesday (22-Dec-2009), as analysts at UBS raised their price targets for a number of carriers and oil prices dropped.
Oil prices fell 0.07% to USD73.77, as oil-producing countries elected to leave production volumes unchanged. As a result, the AMEX Airline Index rose 4.6%. Stocks were also assisted by gains in the wider market, with the Dow ending trading up 0.5%.
UBS raises price targets and 2010 earnings forecasts
UBS analyst, Kevin Crissey, increased his 12-month price targets and profit forecasts for a number of North American carriers during trading. According to Mr Crissey, even if passenger traffic does not continue to improve, airline revenue could increase 1.5% year-on-year in Jan-2010 and 4.5% in Feb-2010.
UBS raised price targets on the following carriers:
- Alaska Air (+3.5%): from USD40 to USD42, rating ‘Buy’;
- American Airlines (+3.5%): from USD10 to USD12, rating ‘Buy’;
- Continental Airlines (+4.9%): from USD22 to USD 23, rating ‘Buy’;
- Delta Air Lines (+3.5%): from USD12 to USD15, rating ‘Buy’;
- Southwest Airlines (+1.2%): from USD10 to USD 12, rating ‘Neutral’;
- United Airlines (+12.2%): from USD15 to USD24, rating ‘Buy’.
2010 profit forecast for the following carriers are as follows:
- AirTran (+2.5%): USD0.70 a share;
- Alaska Air: USD4.38 a share;
- Continental Airlines: USD1.59;
- Delta Air Lines: USD0.91 a share;
- JetBlue (+4.2%): USD0.48 a share;
- Southwest: 0.51 a share;
2010 losses were also narrowed:
- American Airlines: USD1.25 a share;
- US Airways (+11.5%): USD0.26 a share;
- United Airlines: USD0.41 a share.
Delta and United rise to highest prices in 11 months
As a result of the UBS outlook, both Delta Air Lines and United Airlines rose to their highest stock prices in at least 11 months. Delta ended trading at USD11.79 (+3.5%), while United closed at USD12.93 (+12.2%).
Both carriers’ stocks have been increasing since early Nov-2009, as investors see signs of the start of a recovery from the global financial downturn.
Delta Air Lines stock prices: 21-Sep-2009 to 22-Dec-2009
United Airlines stock prices: 21-Sep-2009 to 22-Dec-2009
North & South America selected airlines daily share price movements (% change): 22-Dec-09