BofA cut the price targets for several airline stocks in a note to clients Tuesday, stating fuel volatility is driving estimates lower.
Analysts noted that jet fuel costs have climbed 24% since earnings season began on July 13. As a result, it has adjusted the price targets for the following airlines:
- The Delta Air Lines (NYSE:DAL) price target was lowered to $50 from $53
- The United Airlines (NASDAQ:UAL) price target was cut to $48 from $50
- The American Airlines (NASDAQ:AAL) price target was reduced to $9 from $11
- The Southwest Airlines (NYSE:LUV) price target was moved to $33 from $35
- The Alaska Air Group (NYSE:ALK) price target was cut to $50 from $62
- The JetBlue Airways (NASDAQ:JBLU) price target was lowered to $7 from $8
- The Hawaiian Holdings (NASDAQ:HA) price target was shifted to $7 from $8
- The Allegiant Travel (NASDAQ:ALGT) price target was cut to $80 from $100
- The Frontier Group Holdings (NASDAQ:ULCC)price target was decreased to $10 from $11
"With the fall conference season beginning, we see steady to slightly better revenue trends excluding the Hawaii wildfire impact, but higher jet fuel costs should lead companies to lower margin and EPS outlooks," BofA analysts wrote.
BofA is maintaining a more cautious stance on US airlines due to the earnings revisions. However, the firm did note that booking data has been better than the June/July trend.
"Airline bookings since earnings have improved with net sales up +9% in August compared to the low- to mid-single digit increases seen in June and July," the analysts stated. "We think this should lead to in-line to slightly better commentary except for Hawaii impacts."
Despite the cautious tone, BofA reiterated a Buy rating on DAL, stating it has the least earnings volatility.