logo
  Join        Login             Stock Quote

Hawaiian Holdings (HA) Downgraded To 'Hold' By Deutsche Bank On Yen And Capacity Headwinds

 January 30, 2013 03:59 PM
 


(By Balaseshan) Deutsche Bank analyst Michael Linenberg downgraded rating of Hawaiian Holdings Inc. (NASDAQ: HA) to "Hold" from "Buy" on yen and capacity headwinds.

The brokerage cut price target of the holding company for Hawaiian Airlines Inc. to $7 from $10. DB reduced its 2013 EPS estimate to $0.90 from $1.55 and its 2014 estimate to $1.20 from $1.70.

Linenberg lowered his 2013 EPS estimate as he thinks Hawaiian's margins are likely to remain under pressure for at least first half of 2013 due to: yen weakness; excess supply in several key markets; and the launch of several new markets.

[Related -Airline Companies Lose Following Losses From Fuel- Hedging]

While the analyst thinks Hawaiian will continue to remain profitable for 2013, his new 12 month price target of $7 derived from reduced EPS forecast implies only 7% upside for HA shares from last close of $6.54. As such, he believes the shares no longer warrant a "Buy" rating, hence the change to "Hold".

Hawaiian reported a break even December quarter result ex-specials, which came in below the analyst's EPS estimate and consensus of $0.10. Underlying this result was a 1.9% operating margin ex-specials, which fell short of his 2.5% forecast and represents a 5.4 point year-over-year decline. However, an accounting change tied to its frequent flier program caused a negative $0.08 per share impact.

Linenberg said performance was mixed across Hawaiian's network with North America to Hawaii, inter island, and new Asian markets under pressure while its Australia/New Zealand and some of its same-store Asian markets fared better.

[Related -Hawaiian Holdings Inc. (Nasdaq: HA) Q2 2011 Earnings Preview : Rising Fuel Cost And Japanese Earthquake May Weigh On Earnings]

The company's North America -- Hawaii network continued to face significant competitive capacity additions, as industry supply increased 13% with Hawaiian contributing only 3 percentage points of that growth, the analyst noted.

Linenberg said this portion of the network saw PRASM decrease about 10% due mostly to lower yields as loads remained "relatively flat". Hawaiian's international flying, which now represents 32% of its passenger revenues, saw an 11.8% reduction in PRASM, with 7.7 points of the decrease driven by its new markets.

The analyst reduced his 2014 estimate as he thinks some of the current issues will linger into next year. Overall, he is still anticipating a reasonably good 2014 as evidenced by his 5.6% operating margin (up from 5.1% in 2013).

HA is trading down 13.15% at $5.68 on Wednesday.

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageQihoo 360 Technology Co Ltd. (QIHU) Q2 Earnings Preview: A Green Monday

Qihoo 360 Technology Co Ltd. (NYSE:QIHU) will report its second quarter 2014 financial results on Monday, read on...

article imageSix Stocks that Could Outperform in the next 90 days

Earlier today, Goldman Sachs put out its list of the 50 stocks that Matter Most. It’s a list of the 50 read on...

article imageFoot Locker, Inc. (FL) Q2 Earnings Preview: Running Past the Street View

Foot Locker, Inc. (NYSE:FL) plans to report financial results for its second quarter ended August 2, 2014 read on...

article imageRoss Stores, Inc. (ROST) Q2 Earnings Preview: Could Be Better Than Expected

Ross Stores, Inc. (NASDAQ:ROST) will announce its second quarter 2014 earnings results on Thursday, August read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center

Related Articles:

Stocks In Focus: LLY, SYMC, HA
More Articles on: Transportation



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.