Analysts at Deutsche Bank (NYSE:DB) raised the earnings per share estimates for Alaska Air Group Inc. (NYSE:ALK) and Allegiant Travel Co. (Nasdaq:ALGT), while lowering the EPS estimate for Southwest Airlines Co. (NYSE:LUV). Analysts raised Alaska and Allegiant due to better than expected revenue and modestly lower fuel prices, and lowered Southwest to reflect a more gradual ramp-up of benefits related to the acquisition of AirTran.
EPS estimates for the September quarter for Alaska Air Group is raised to $3.40 from $3.10, while the FY 2011 EPS estimate is hiked to $8 from $7.70, better than the Wall Street consensus of $7.93. Similarly, EPS estimates for the September quarter for Allegiant Travel is improved to $0.45 per share from $0.35 per share and the FY 2011 EPS estimate is raised to $2.55 from $2.45. Meanwhile, September quarter EPS estimates for Southwest is lowered to $0.12 per share from $0.15 and the FY 2011 EPS estimate is cut to $0.40 from $0.45, versus a consensus of $0.36. DB analysts also lowered LUV's FY 2012 EPS estimate to $0.60 from $0.75, and the FY 2013 EPS estimate is cut to $1 from $1.25 per share. This reflects a more gradual ramp-up of the earnings synergies from the AirTran acquisition. They believe that a lower multiple is more suitable for Southwest shares given the increased execution risk associated with the acquisition and their view that the company will not be able to achieve its financial return objectives until 2013 at the earliest. They also lowered LUV's shares rating to Hold from Buy.
On a year-to-date basis, Alaska Air has a share performance of 1.48 percent, and compared with Standard & Poor's it has a year-to-date share performance of 10.46 percent. Allegiant Travel has a share performance of -3.98 percent, and compared with S&P's it has a year-to-date share performance of 4.51 percent. Southwest has a share performance of -40.76 percent, and compared with S&P's it has a year-to-date share performance of -35.52 percent.
Shares of Alaska Air rose 2.68 percent, or $1.61, to trade at $61.65. Shares of Allegiant gained 1.16 percent, or $0.57, to trade at $49.50. Shares of Southwest were up 2.76 percent, or $0.22, to trade at $8.19.