Anaylst Opinion, '03 Double digit Growth

chase

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The market realizes what good product/business model SWA is. SWA is working to bring the customer back & particularly the business flyer. It will happen, the analyst below believes so also.

chase

Blaylock & Partners Initiates Coverage Of Southwest Airlines With a 'Hold' Rating
Tuesday August 27, 4:45 pm ET

NEW YORK, Aug. 27 /PRNewswire/ -- Blaylock & Partners' airlines and transportation analyst Ray Neidl has initiated coverage of Southwest Airlines Co. (NYSE: LUV - News) with a "hold" recommendation, but will raise his recommendation upon signs of economic recovery, an industry upturn or a pullback on the stock.



Mr. Neidl believes that Southwest Airlines should be a core holding for portfolio managers, as the company has proven that it can maintain profitability and growth. In his report titled "The Growing Giant," Mr. Neidl states that Southwest's quarterly earnings have consistently remained positive and the company continues to pay out dividends, supporting his belief that Southwest is the top airline in the industry. The analyst also writes that the company is capable of financing rapid growth through strong cash flow generation, and has by far the most solid balance sheet in the industry.Despite the volatile economic state and the precariousness of the airline industry after Sept. 11, Southwest continues to grow at about 5 percent -- half its normal rate of 10 percent plus annually -- and is recovering faster than its competitors. Mr. Neidl notes that the company should return to double-digit growth in 2003 and achieve annual EPS of $0.80 to $1, up from his current $0.67 estimate.

Other key reasons for Mr. Neidl's recommendation include the fact that Southwest has a unique product, offering a simple model of frequent, one class, cheap air service; has one of the highest daily aircraft utilization rates in the industry; has a simple fleet, which simplifies operations and keep costs low; and has management who understands that simplicity of product, low cost, and friendly service help maintain the company's competitive advantage.

In terms of risks, Mr. Neidl foresees Southwest facing the usual industry risks, which include the state of the economy, fuel prices and labor disruptions. He also notes that Southwest may face additional competition from other growing low-cost airlines and network carriers as they reduce costs.

Blaylock's ratings system consists of "buy," "hold" and "sell" recommendations. Investment banking stocks have a "not rated" designation.

Institutional investors interested in receiving more information should contact Mr. Neidl at 212-715-6627 (rneidl@blaylocklp.com). Journalists interested in receiving copies of the research reports should contact Dao Tran at dtran@starkmanassociates.com.
 

flx757

I gotta have more cowbell
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The analyst believes in the product/business plan of these two companies, as well.

Blaylock & Partners Initiates Coverage of Alaska Air and AirTran With 'Buy' Ratings



Monday August 26, 10:44 AM EDT

NEW YORK, Aug 26, 2002 /PRNewswire via COMTEX/ -- Blaylock & Partners' airlines and transportation analyst Ray Neidl has initiated coverage of Alaska Air Group, Inc. (ALK) and AirTran Holdings Co. (AAI) with "buy" recommendations and target prices of $33 and $6 per common share, respectively.

In his report titled "Dominating Its Corner of the World," Mr. Neidl acknowledges that although the airline group has appreciated over the past few days, and his multiple is a bit high, he anticipates the possibility of a further increase in his 2003 EPS estimate -- which is 50 percent above consensus.

Mr. Neidl notes that the full service carrier has a strong niche market -- the airline dominates the north-south route system along the western coast of North America. It also is the main connector for travelers going from Alaska to the rest of the United States. As well, Alaska Air has interline-feed agreements with industry giants American, Northwest and Continental Airlines that provide it with additional flow traffic and serve as competitive barriers to entry.



Alaska Air also is recovering faster than the overall airline industry; Mr. Neidl believes it is now ready to resume its former trend of over 9 percent annual growth and its subsidiary Horizon Air to have growth in the low teens.

Mr. Neidl believes Alaska Air will be the only airline to have increased earnings for 3Q02 and will be the only U.S. network airline to return to profitability this year. Historically, the stock has traded at a premium multiple to most other big airlines, however, this trend has been disrupted over the past two years, first by a January 2000 accident involving one of its aircraft, and then by September 11.

In assigning AirTran a premium multiple for an airline, Mr. Neidl believes the carrier has opportunities for growth considering its low-cost product and its competitors' financial problems. In his report titled "Opportunities for Growth Abound," the Blaylock analyst states that AirTran has low risks for expansion into new markets and he expects the company to grow aggressively by about 20 percent annually. This growth should be achieved by AirTran continuing to build on its Atlanta hub operation, adding additional spokes and selective point-to-point routes, and building additional focus cities.

The carrier has been encouraged by mid-size cities to initiate services in those cities and been offered revenue guarantees. Presently, it has a defined market niche in the Southeast, Atlantic Coast, Northeast and Midwest regions of the U.S., and is being welcomed by budget-minded travelers.

Other reasons for the positive stock recommendation include the fact that the company's management is cost and service conscious; it has a more productive work force than the major network carriers; it has a simple fleet, which simplifies maintenance, inventory and crew training; the company has faster recovery than larger network carriers in terms of traffic and return to profitability; and the company's simple business plan, which increases the possibility for successful growth.

In terms of risks, Mr. Neidl foresees the two airlines facing the usual industry risks, which include the state of the economy, fuel prices and labor disruptions.

Blaylock's ratings system consists of "buy," "hold" and "sell" recommendations. Investment banking stocks have a "not rated" designation.

Institutional investors interested in receiving more information should contact Mr. Neidl at 212/715-6627 (rneidl@blaylocklp.com). Journalists interested in receiving copies of the research reports should contact Dao Tran at dtran@starkmanassociates.com.

Based in New York, Blaylock & Partners, L.P. has been ranked by Black Enterprise magazine as the number one minority-owned investment banking firm for 1999 and 2000. The firm has co-managed four of the largest most recent IPOs -- Travelers Property Casualty Corp., Prudential Financial, Inc., Kraft Foods Inc., and Agere Systems Inc. Blaylock & Partners is a member of the NASD and SIPC.

Blaylock & Partners, L.P. is a member of the National Association of Securities Dealers, CRD number 35669.
 
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