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Majority of the Analysts Are Positive on Spirit Airlines

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Jul. 18 2016, Published 10:17 a.m. ET

Analyst views

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

According to the Bloomberg consensus, out of the 14 analysts tracking Spirit Airlines (SAVE), 85% (12 analysts) have a “buy” recommendation on the stock, 14.3% (two analysts) have a “hold” rating, and none of the analysts have a “sell” rating. Most analysts have maintained their ratings after the 1Q16 earnings result.

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Target price

Spirit Airlines’s consensus 12-month target price is $55.79, which indicated a 17.4% upside potential on July 14, 2016. Daniel McKenzie from Buckingham Research Group and Sidoti & Company’s Stephen O’Hara each have the highest target price of $64 and have maintained a “buy” rating.

Michael Churchill from Churchill Research and Jamie Baker from J.P. Morgan, have the lowest target prices of $45 and $47, respectively.

Analyst estimates

Sales are expected to continue growing for the next two quarters. For fiscal 2016, analysts estimate sales to grow by 9% to $2.3 billion, slightly slower than the 11% growth seen in 2015. EBITDA is expected to remain almost flat at $572 million.

Revenue growth expectations for SAVE are higher than most of its peers, including Southwest Airlines’s (LUV) expectation of 5%, JetBlue Airways’s (JBLU) 8%, and Allegiant Travel’s (ALGT) 6%. The iShares Morningstar Small-Cap ETF (JKJ) holds 0.65% in SAVE.

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.

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