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Raymond James made a series of changes in the firm’s coverage of airlines ahead of the Q3 earnings season.
As far as the industry outlook is concerned, the firm notes lower fuel prices, stronger demand, and higher industry pilot costs. On the topic of pilot costs, Raymond James notes that this has proved to be a greater cost headwind than previously anticipated, which should “roll through most airlines over the next 18-24 months.”
Raymond James cut price targets on Allegiant Travel Company (NASDAQ:ALGT) and Southwest Airlines Company (NYSE:LUV) to $130 and $48 per share from $150 and $51, respectively. On the other hand, the price target for Delta Air Lines Inc (NYSE:DAL) is raised to $52 per share from $50.
Alongside Delta, the investment bank highlights United Airlines (NASDAQ:UAL) (UAL) as the best-positioned airline stock.
“It appears there is greater demand recovery among large corporates and in the Northeast in particular, which along with gradual reopening of long-haul international markets likely places UAL and DAL in a relatively stronger position in terms of revenue recovery,” Raymond James said in a client note.
