By Philip van Doorn, MarketWatch
(Updates story with closing prices for airline stocks.)
Investors are pouring money into airline stocks as the government eases restrictions on social activity and travel. Below is a list of U.S. airline stocks, with Tuesday’s gains and analysts’ favorites.
You may have been surprised that Warren Buffett decided to sell Berkshire Hathaway’s /zigman2/quotes/200060694/composite BRK.B -1.31% holdings of airline stocks after they had already crashed in the wake of the coronavirus crisis and the obvious need to curtail air travel. During Berkshire’s annual meeting May 2, Buffett said he had been “wrong about that business,” and that the reaction to COVID-19 had changed the industry “in a major way.”
But even a troubled industry can see its stocks fall too far in the midst of economic chaos.
Michael Brush wrote Tuesday that Buffett made a mistake when he sold his airline shares, in part, because executives at the airlines are confident enough in the industry’s recovery prospects that they have been buying shares of their own companies. Most of the airline stocks have risen significantly since March 23, when the S&P 500 Index /zigman2/quotes/210599714/realtime SPX -0.69% hit its low for the year, before a bounce-back rally for the benchmark index began. Then again, they are still far down for 2020.
UBS analyst Myles Walton upgraded Southwest Airlines /zigman2/quotes/201071949/composite LUV -3.45% to a “buy” rating from a neutral rating, and raised his price target for the stock to $41 from $37 in light of “a clearer path for domestic travel recovery.” In a note to clients, Walton wrote that “unlike many other airlines, the balance sheet position of LUV is remarkably clean (near-net cash balance sheet), which provides protection from any step backward in demand under another wave of COVID-19.”
Nine airline stocks are included in the S&P 1500 Composite Index (which itself is made up of the S&P 500, the S&P 400 Mid Cap Index /zigman2/quotes/210599897/delayed MID -1.23% and the S&P Small Cap 600 Index /zigman2/quotes/210599868/delayed SML -1.62% ).
Here they are, sorted by how much they went up on Tuesday:
|Company||Ticker||Price change - May 26||Price change since March 23||Price change - Feb. 19 - March 23||Price change - 2020|
|United Airlines Holdings Inc.||/zigman2/quotes/205037281/composite UAL||16.3%||12.5%||-66.9%||-66.5%|
|Allegiant Travel Co.||/zigman2/quotes/208507686/composite ALGT||15.8%||41.2%||-56.5%||-41.8%|
|American Airlines Group Inc.||/zigman2/quotes/209207041/composite AAL||14.8%||8.7%||-63.8%||-61.2%|
|JetBlue Airways Corp.||/zigman2/quotes/207639051/composite JBLU||14.3%||54.0%||-67.0%||-43.6%|
|Hawaiian Holdings Inc.||/zigman2/quotes/203188135/composite HA||13.2%||72.7%||-67.2%||-48.3%|
|Delta Air Lines Inc.||/zigman2/quotes/200327741/composite DAL||13.0%||15.4%||-62.0%||-56.1%|
|Alaska Air Group Inc.||/zigman2/quotes/200972303/composite ALK||12.9%||45.8%||-63.1%||-48.3%|
|Southwest Airlines Co.||/zigman2/quotes/201071949/composite LUV||12.6%||-3.6%||-40.9%||-39.8%|
|SkyWest Inc.||/zigman2/quotes/205631497/composite SKYW||8.8%||47.2%||-63.3%||-52.5%|
You can click on the tickers for more about each airline.
You will have to scroll the chart to see all the data.
Leaving the group in the same order, here is a summary of opinion among sell-side analysts polled by FactSet, including price targets and implied upside:
|Company||Ticker||Share 'buy' ratings||Share neutral ratings||Share 'sell' ratings||Closing price - May 24||Consensus price target||implied 12-month upside potential|
|United Airlines Holdings Inc.||/zigman2/quotes/205037281/composite UAL||53%||47%||0%||$29.53||$36.87||25%|
|Allegiant Travel Co.||/zigman2/quotes/208507686/composite ALGT||70%||20%||10%||$101.29||$100.67||-1%|
|American Airlines Group Inc.||/zigman2/quotes/209207041/composite AAL||21%||37%||42%||$11.14||$10.87||-2%|
|JetBlue Airways Corp.||/zigman2/quotes/207639051/composite JBLU||20%||67%||13%||$10.57||$10.62||0%|
|Hawaiian Holdings Inc.||/zigman2/quotes/203188135/composite HA||22%||56%||22%||$15.15||$13.00||-14%|
|Delta Air Lines Inc.||/zigman2/quotes/200327741/composite DAL||63%||37%||0%||$25.65||$34.81||36%|
|Alaska Air Group Inc.||/zigman2/quotes/200972303/composite ALK||57%||43%||0%||$35.03||$39.69||13%|
|Southwest Airlines Co.||/zigman2/quotes/201071949/composite LUV||53%||42%||5%||$32.52||$39.00||20%|
|SkyWest Inc.||/zigman2/quotes/205631497/composite SKYW||100%||0%||0%||$30.67||$43.14||41%|