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The Majority of Analysts Have a Positive View of Spirit Airlines

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Analyst views

Analysts’ recommendations, or changes to recommendations, can tell us about how the analysts see an industry and business environment changing in the quarters ahead. It can also have a significant impact on a company’s stock price.

According to a Bloomberg consensus survey, out of the 15 analysts tracking Spirit Airlines (SAVE), 80% (12 analysts) have a “buy” recommendation on the stock. Two analysts, or 20%, have a “hold” rating. None of the analysts have a “sell” rating. All analysts maintained their ratings after the 4Q15 earnings results.

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Target price

Spirit Airlines’ consensus 12-month target price is $58.20, which indicates a 9.9% return potential as of April 19, 2016. Daniel McKenzie from Buckingham Research Group and Sterne Agee CRT’s Michael W. Derchin each cited the highest target price of $68 and maintained a “buy” rating.

Michael Churchill from Churchill Research and Julie Yates from Credit Suisse each have the lowest target prices of $45 and $46, respectively.

Analyst estimates

Spirit Airlines’ (SAVE) sales are expected to continue growing for the next four quarters. For fiscal 2016, analysts estimate sales to grow by 9% to $2.3 billion, slightly slower than the 11% growth seen in 2015. SAVE’s EBITDA[1. earnings before interest, tax, depreciation, and amortization] is expected to grow at a much slower pace of 4% to $605 million.

SAVE’s revenue growth expectation is higher than most of its peers, including Southwest Airlines’ (LUV) expectation of 5%, JetBlue Airways’ (JBLU) 8%, and Allegiant Travel’s (ALGT) expectation of 6%.

In the next few articles, we will discuss what led to these estimates, helping investors judge whether analysts are being optimistic or conservative on the stock. We will also help you understand what may be priced into the stock.

Investors can gain exposure to airline stocks by considering the iShares Transportation Average ETF (IYT), which invests ~24% of its portfolio in airlines.

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