Evercore Maintains Hold On Spirit Airlines Shares, $85 PT

In a research report published today, Evercore ISI analyst Duane Pfennigwerth maintained a Hold rating on Spirit Airlines (NASDAQ:SAVE) with an $85 price target, which represents a slight upside from where the stock is currently trading.

Pfennigwerth wrote, “Along with its November traffic, Spirit slightly reduced 4Q14 operating margin guidance despite lower fuel and non-fuel unit cost expectations. The leisure-focused ultra-low-cost airline is seeing a softer close-in fare environment (over last two weeks) and specifically called out the Dallas market (impacted by Southwest’s growth + low introductory fares due to Wright relief). The pricing umbrella in SAVE’s markets provided customers less motivation to trade down.”

The analyst continued, “While it makes sense that the industry will not keep all of the windfall from lower fuel, we were surprised to hear softness vs. guide this early (4Q). Spirit’s accelerating capacity growth may be contributing to softer unit revenue trends vs. plan in our view. Our 4Q14 EPS estimate is reduced to $0.78 (+40% y/y) from $0.86 on lower unit revenue (down 4% from down 2% prior). Our ’15 EPS estimate moves to $4.50 from $4.70 (4% reduction) based on lower baseline unit revenue into 1Q15.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Duane Pfennigwerth has a total average return of 9.1% and a 55.6% success rate. Pfennigwerth is ranked #1335 out of 3429 analysts.

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