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Macquarie names top picks in U.S. airline sector

Stock MarketsMar 27, 2018 03:48PM ET
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© Reuters. Macquarie names top picks in U.S. airline sector
  • Macquarie Research sizes up the airline sector in a new note posted today.
  • Analyst Susan Donofrio points out that rising fuel prices and fare discounting have taken away some of the punch from tax reform savings, and when coupled with United's alarming capacity update, led to valuations that now stand at reasonable levels versus historic norms.
  • Five airline stocks earn Outperform ratings and lush price targets from Donofrio and team.
  • Spirit Airlines (NASDAQ:SAVE): "Abundance of growth opportunities given targeted 15-20% capacity growth annually."
  • Alaska Air Group (NYSE:ALK): "Strong cash position insulates it well + Virgin America acquisition gives ALK new growth opportunities from the West Coast. Cost initiatives should help mitigate higher wage costs next year."
  • Delta Air Lines (NYSE:DAL): "Sets the standard when it comes to revenue programs. Next up is international route focus and enhancing the value of SkyMiles rewards. Leads legacy carriers in operational and financial metrics + Ahead of the pack on shareholder-friendly actions (increasing dividend, buybacks)
  • Hawaiian Holdings (NASDAQ:HA): "Fears around United/Southwest entry to Hawaii as well as intra-island competition fears are overdone...Lots of room to further diversify its network with underserved growth markets in Asia."
  • Southwest Airlines (NYSE:LUV): "Unique business model combines elements of ULCCs and larger carriers; results in high customer loyalty and strong operational performance... best balance sheet in the industry."
  • Related ETF: JETS.
  • Now read: Spirit Airlines: Where Is The Spirit?

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Macquarie names top picks in U.S. airline sector

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