Friday, October 11, 2013

Spirit Q3 RASM Trumps Management Expectations-Rises 10%


Spirit has blown through our price target of $39.50, and we are currently re-evaluating estimates based on the positive RASM numbers released last week. An updated price target will be announced by the end of the week.

Spirit Airlines rose nearly 10% in intraday trading today after a benchmark revenue gauge came in much higher than expected. Revenue per available seat mile (RASM) was announced to be in the low double digits after volume in September increased nearly 29%. This RASM figure trumped Spirit’s expectations of a mid-single digit number. As a result, Citi upgraded the stock to a BUY from a HOLD and Evercore Partners raised its price target to $44 from $41. We maintain our BUY rating on the stock, with a price target of $39.50.  

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