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LUV

Southwest

$54.40

0.05 (0.09%)

, AAL

American Airlines

$46.19

-0.81 (-1.72%)

11:42
09/15/17
09/15
11:42
09/15/17
11:42

JPMorgan bearish on airlines due to 'self-inflicted' price woes

JPMorgan is bearish on the outlook for airlines, saying that the sector appears increasingly unlikely to meet consensus estimates given weak pricing in the U.S. and current fuel costs. The firm downgraded its ratings on American Airlines (AAL), United Continental (UAL), and Spirit Airlines (SAVE) to Neutral from Overweight. However, it upgraded Southwest (LUV) to Overweight from Neutral, citing valuation. AIRLINES' OUTLOOK: JPMorgan analyst Jamie Baker believes that consensus estimates for the airline sector are "increasingly unachievable" due to current fuel costs and the sector's unwillingness to vigorously combat weak U.S. prices. Moreover, the weak U.S. prices are "self-inflicted and unrelated to capacity," as the lowest prices are in markets which have the "tightest supply," according to Baker. As a result, the analyst does not believe that adjusting capacity will be a "panacea" for the sector. Consensus estimates for Q4 appear to imply that the industry's revenue per available seat mile, or RASM, will increase in Q4 compared with Q3. However, Q4 RASM very rarely increases versus Q3, Baker reported. AMERICAN: The company has not responded effectively to price cuts by its competitors, and investors may become less upbeat on the stock if the company's unit revenue trends remain sluggish and below expectations, warned Baker. UNITED: Like American, United Continental has not responded effectively to price cuts by its competitors, and investors could be deterred by the company's unit revenue trends, which are likely to come in below expectations, according to the analyst. SPIRIT: Baker believes that the airlines has implemented excessive fare cuts. As a result, the analyst has become less confident in Spirit's ability to generate "steady returns and peer-leading margins." SOUTHWEST: The valuation of the company's stock is "compelling" following its recent downturn, according to Baker. Additionally, the stock may be boosted by investors' affinity for safer and best in class airlines in the current environment, Baker believes. PRICE TARGETS: Baker lowered his price target on American to $53 from $61, on United Continental to $68 from $84, and on Spirit to $37 from 445. He raised his price target on Southwest to $66 from $60. OTHERS TO WATCH: Other publicly traded companies in the space include Delta Air Lines (DAL) and JetBlue (JBLU). PRICE ACTION: In morning trading, American lost 0.7% to $45.89, United Continental sank 3% to $59.40, Spirit fell 2.6% to $33.91, and Southwest was flat at $54.38.

LUV

Southwest

$54.40

0.05 (0.09%)

AAL

American Airlines

$46.19

-0.81 (-1.72%)

UAL

United Continental

$59.48

-1.77 (-2.89%)

SAVE

Spirit Airlines

$34.83

-0.08 (-0.23%)

DAL

Delta Air Lines

$48.15

-0.12 (-0.25%)

JBLU

JetBlue

$19.37

0.02 (0.10%)

  • 27

    Sep

  • 02

    Oct

LUV Southwest
$54.40

0.05 (0.09%)

09/15/17
09/15/17
UPGRADE

On The Fly: Top five analyst upgrades
Catch up on today's top five analyst upgrades with this list compiled by The Fly: 1. Dish (DISH) upgraded to Neutral from Sell at Citi with analyst Jason Bazinet saying the valuation seems fair following the recent weakness in the shares. 2. First Solar (FSLR) upgraded to Buy from Hold at Deutsche Bank with analyst Vishal Shah saying channel checks indicate that "robust" U.S. demand is driving module prices higher. 3. Southwest (LUV) upgraded to Overweight from Neutral at JPMorgan with analyst Jamie Baker saying the recent correction in Southwest shares makes for a "compelling" risk-to-reward profile. 4. Qualcomm (QCOM) upgraded to Outperform from Market Perform at Northland with analyst Tom Sepenzis citing expectations for market share gains in 2018, particularly at the high end, as he sees the company and partner Himax (HIMX) as well positioned to become the "de facto leading 3D sensing solution" with Android manufacturers who follow the lead of Apple's (AAPL) new iPhone X. 5. Harsco (HSC) upgraded to Buy from Hold at Argus with analyst David Coleman saying cost cutting initiatives, returns on prior investments, and improving end market demand have resulted in above Street results in the first half of 2017. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
08/18/17
08/18/17
UPGRADE
Target $65

Outperform
Follow-up: Southwest upgraded to Outperform at Wolfe Research
As previously reported, Wolfe Research upgraded Southwest to Outperform from Peer Perform with a $65 price target saying the recent pullback in shares provides favorable risk/reward.
08/21/17
STFL
08/21/17
NO CHANGE
STFL
Southwest could be taken private, says Stifel
Stifel analyst Joseph DeNardi believes that the market is tremendously undervaluing airlines' marketing programs. He says that Southwest is the most compelling takeover target in the sector, as he believes that its "loyalty program and the capacity of its balance sheet...are fundamentally misvalued." The analyst says that Southwest could become a target of private equity firms.
09/15/17
JPMS
09/15/17
UPGRADE
Target $66
JPMS
Overweight
Southwest upgraded to Overweight from Neutral at JPMorgan
JPMorgan analyst Jamie Baker upgraded Southwest Airlines (LUV) to Overweight and raised his price target for the shares to $66 from $60. The analyst this morning also downgraded American Airlines (AAL), United Continental (UAL) and Spirit Airlines (SAVE) to Neutral. The recent correction in Southwest shares makes for a "compelling" risk-to-reward profile, Baker tells investors in a sector research note. An environment in which investors gravitate towards "relative safety and best in class" may benefit Southwest shares, the analyst contends.
AAL American Airlines
$46.19

-0.81 (-1.72%)

08/07/17
BERN
08/07/17
NO CHANGE
BERN
American 'most at risk' from United Continental price actions, says Bernstein
Bernstein analyst David Vernon says that American Airlines (AAL) is "most at risk" from United Continental's (UAL) price cuts. The analyst adds that Spirit (SAVE) will have to give its pilots a 60%-80% raise, possibly putting five to six percentage points of its margins at risk. Vernon keeps Market Perform ratings on American and United.
09/15/17
JPMS
09/15/17
DOWNGRADE
Target $53
JPMS
Neutral
American Airlines downgraded to Neutral from Overweight at JPMorgan
JPMorgan analyst Jamie Baker downgraded American Airlines to Neutral and lowered his price target for the shares to $53 from $61. The analyst is disappointed by the "lack of pricing vigor" that American has displayed in recent weeks. He believes investor enthusiasm for the shares may wane if unit revenue trends remain sluggish and below expectations in the near-term.
09/15/17
09/15/17
DOWNGRADE

On The Fly: Top five analyst downgrades
Catch up on today's top five analyst downgrades with this list compiled by The Fly: 1. Equifax (EFX) downgraded to Hold from Buy at Argus with analyst Jasper Hellweg citing news of a major hack on the company's data that could have lasting effects. 2. FedEx (FDX) downgraded to Neutral from Buy at UBS with analyst Thomas Wadewitz citing TNT issues following the cyber-attack in June that knocked out multiple systems. 3. Carnival (CCL) downgraded to Neutral from Outperform at Credit Suisse with analyst Tim Ramskil saying he is worried that his estimate of absolute industry capacity growth in 2018-2021 is double that of the last five years. 4. American Airlines (AAL), United Continental (UAL), and Spirit Airlines (SAVE) were downgraded to Neutral from Overweight at JPMorgan. 5. Acuity Brands (AYI) downgraded to Market Perform from Outperform at Wells Fargo with analyst Richard Kwas saying his firm's electrical channel checks indicate the 8% consensus organic revenue growth estimate for FY18 does not have upside. The analyst thinks shares are likely range-bound in the $160-$200 range "for the time being." He believes a "material step up" in tiered solutions growth is needed for gross margin to outperform expectations. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
UAL United Continental
$59.48

-1.77 (-2.89%)

09/15/17
JPMS
09/15/17
DOWNGRADE
Target $68
JPMS
Neutral
United Continental downgraded to Neutral from Overweight at JPMorgan
JPMorgan analyst Jamie Baker downgraded United Continental to Neutral and lowered his price target for the shares to $68 from $84. The analyst believes consensus estimates for U.S. airlines look "increasingly unachievable" given current fuel prices and the "lack of any apparent vigor in shoring up domestic pricing weakness."
SAVE Spirit Airlines
$34.83

-0.08 (-0.23%)

09/06/17
SBSH
09/06/17
NO CHANGE
Target $48
SBSH
Buy
Spirit Airlines shares are bottoming, says Citi
Citi analyst Kevin Crissey believes Spirit Airlines shares are bottoming after the company lowered Q3 RASM guidance to down 7%-8.5% year-over-year from down 2%-4%. While the company is struggling, the stock traded essentially in-line with the Airline sector yesterday despite its investor update, which is a good sign that the worst for shares may be behind, Crissey tells investors in a research note. He lowered his price target for Spirit, his top pick in the sector, to $48 from $52 and keeps a Buy rating on the name.
09/15/17
JPMS
09/15/17
DOWNGRADE
Target $37
JPMS
Neutral
Spirit Airlines downgraded to Neutral from Overweight at JPMorgan
JPMorgan analyst Jamie Baker downgraded Spirit Airlines to Neutral and lowered his price target for the shares to $37 from $45. The analyst is less confident in Spirit's ability to generate "steady returns and peer-leading margins" amid continued growth in to competitor markets.
DAL Delta Air Lines
$48.15

-0.12 (-0.25%)

08/18/17
WOLF
08/18/17
UPGRADE
WOLF
Outperform
Delta Air Lines upgraded to Outperform from Peer Perform at Wolfe Research
08/18/17
08/18/17
UPGRADE
Target $62

Outperform
Follow-up: Delta Air Lines upgraded to Outperform on valuation at Wolfe Research
As previously reported, Wolfe Research upgraded Delta Air Lines to Outperform from Peer Perform with a $62 price target. The firm views the recent pullback in shares as attractive and thinks reset margin targets in May are more realistic and achievable.
09/06/17
IMPC
09/06/17
NO CHANGE
Target $50
IMPC
In-Line
Delta Air Lines price target lowered to $50 from $54 at Imperial Capital
Imperial Capital analyst Michael Derchin lowered his price target for Delta Air Lines to $50 after the company indicated Q3 system PRASM is likely to be lower than initially anticipated. The analyst expects close-in yields to remain weak through FY17 and keeps an In-Line rating on the shares.
09/06/17
DBAB
09/06/17
NO CHANGE
Target $42
DBAB
Buy
Deutsche cuts price targets for Spirit Airlines, Delta Air Lines
Following the September quarter updates, Deutsche Bank analyst Michael Linenberg lowered his price target for Spirit Airlines (SAVE) to $42 from $54 and for Delta Air Lines (DAL) to $59 from $62. The analyst cites fuel and pricing pressures but keeps Buy ratings on both names.
JBLU JetBlue
$19.37

0.02 (0.10%)

06/29/17
BOFA
06/29/17
NO CHANGE
BOFA
BofA/Merrill raises Airline estimates, Delta and Southwest best positioned
BofA/Merrill analyst Andrew Didora raised Airline estimates and price target to reflect lower fuel pricing and remains positive on the industry said to remain selective into second-half 2017. The analyst believes Buy rated Delta Air Lines (DAL) and Southwest (LUV) are best positioned for sequential unit revenue improvement in the second half due to decelerating and easing comps and raised their price targets to $71 and $75 from $64 and $62, respectively. The analyst expects capacity to increase modestly in 2018 to +3.4% from +2.8% in 2017 and expects Delta to accelerate capacity growth to +1.9% and Southwest to +5%. As part of the sector note, Didora raised Buy rated United Continental's (UAL) price target to $105 from $85, Alaska Air's (ALK) to $120 from $115, Spirit Airlines' (SAVE) down to $68 from $75, and raised Underperform rated American Airlines' (AAL) to $42 from $40 and lowered Hawaiian Holdings' (AAL) to $43 from $47.
07/10/17
OPCO
07/10/17
NO CHANGE
OPCO
Oppenheimer recommends buying American Airlines, United Continental
Oppenheimer analyst Ari Wald continues to make the case that interest rates are bottoming, reflationary sectors are positioned for a stronger second half, and market internals should strengthen as well. The analyst sees additional upside for both Banks and Transports, and within the last, its high-conviction idea is to keep buying airlines, such as Alaska Air (ALK), American Airlines (AAL), Delta Air Lines (DAL), JetBlue (JBLU), Southwest (LUV), and United Continental (UAL). Elsewhere in Transports, Wald is bullish on the breakout in shares of FedEx (FDX) and Old Dominion (ODFL), and views Norfolk Southern (NSC) and Landstar System (LSTR) as attractive pre-breakout candidates.
07/26/17
BUCK
07/26/17
DOWNGRADE
Target $24
BUCK
Neutral
JetBlue downgraded to Neutral from Buy at Buckingham
Buckingham downgraded JetBlue to Neutral and cut its price target to $24 from $28 based on a reduced 2018 outlook following the Q2 report. The firm's analyst now incorporates a pillot deal and said multiple expansion is unlikely given ongoing negotiations and increasing competitor capacity at the end of the year.
09/01/17
STPT
09/01/17
INITIATION
Target $26
STPT
Buy
JetBlue initiated with a Accumulate at Standpoint Research
Standpoint initiated JetBlue with an Accumulate and a $26 price target.

TODAY'S FREE FLY STORIES

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VRX

Valeant

$16.68

0.685 (4.28%)

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FTR

Frontier Communications

$7.08

-0.15 (-2.07%)

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Frontier Communications call volume above normal and directionally bullish »

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MCD

McDonald's

$169.13

0.8301 (0.49%)

14:53
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McDonald's temporarily pulling chicken tenders due to high demand, BI reports »

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SLM

Sallie Mae

$10.60

-0.03 (-0.28%)

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SQM

SQM

$56.50

-0.835 (-1.46%)

14:49
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14:49
Options
SQM options imply 5.9% move in share price post-earnings, above median historical move »

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AMZN

Amazon.com

$1,139.49

13.18 (1.17%)

, WMT

Wal-Mart

$96.39

-0.13 (-0.13%)

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Periodicals
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AMZN

Amazon.com

$1,139.49

13.18 (1.17%)

WMT

Wal-Mart

$96.39

-0.13 (-0.13%)

BBY

Best Buy

$56.72

0.66 (1.18%)

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  • 20

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TRP

TransCanada

$49.68

-0.58 (-1.15%)

14:33
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Conference/Events
TransCanada to hold investor day »

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CERN

Cerner

$66.68

0.95 (1.45%)

, AMZN

Amazon.com

$1,139.49

13.18 (1.17%)

14:26
11/22/17
11/22
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14:26
Recommendations
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CERN

Cerner

$66.68

0.95 (1.45%)

AMZN

Amazon.com

$1,139.49

13.18 (1.17%)

03/08/13
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  • 28

    Nov

  • 18

    Mar

14:25
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General news
FOMC minutes showed concerns over low inflation »

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OTEX

OpenText

$33.91

0.38 (1.13%)

14:23
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FEIM

Frequency Electronics

$9.32

-0.11 (-1.17%)

14:22
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11/22
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Frequency Electronics appoints largest shareholder to its board »

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14:20
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General news
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$NSD

NASDAQ Market Internals

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$NYE

NYSE Market Internals

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SASR

Sandy Spring Bancorp

$38.98

0.04 (0.10%)

, WFBI

WashingtonFirst

$33.70

-0.13 (-0.38%)

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$38.98

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WFBI

WashingtonFirst

$33.70

-0.13 (-0.38%)

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  • 28

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ILG

ILG

$28.11

-0.5 (-1.75%)

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JACK

Jack in the Box

$102.57

-0.41 (-0.40%)

, APO

Apollo Global

$30.53

0.37 (1.23%)

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Jack in the Box

$102.57

-0.41 (-0.40%)

APO

Apollo Global

$30.53

0.37 (1.23%)

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  • 30

    Nov

SASR

Sandy Spring Bancorp

$38.98

0.04 (0.10%)

, WFBI

WashingtonFirst

$33.70

-0.13 (-0.38%)

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SASR

Sandy Spring Bancorp

$38.98

0.04 (0.10%)

WFBI

WashingtonFirst

$33.70

-0.13 (-0.38%)

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  • 28

    Nov

WEN

Wendy's

$14.11

0.16 (1.15%)

13:50
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Options
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