Market Scan
Airlines Drop To Buying Level
R.M. Schneiderman, 01.24.07, 11:06 AM ET
AMR
Tear Sheet Chart News
Continental Airlines
Tear Sheet Chart News
US Airways Group
Tear Sheet Chart News
It's a case of buy low, sell high. After airline stocks tumbled on Tuesday, they are now cheap enough to be attractive, according to a Wednesday report by Ray Neidl, an analyst for Calyon Securities.
Airline shares slid on Tuesday for a variety of reasons. UAL (nasdaq: UAUA - news - people ) reported disappointing earnings, AMR (nyse: AMR - news - people ) issued $13 million in common stock, the price of oil rose and there were reports that US Airways' latest proposal to acquire Delta Airlines would fail. (See "US Airways Sweetens Delta Bid")
Yet all of the above are reasons to buy, "We believe that these are all short-term events and represent a buying opportunity since we still see longer-term trends being positive," he said.
"The fact that higher oil prices drove down airline stock prices is no surprise. Our projections for the year assume high oil prices, so this does not affect our outlook."
Neidl also said that while industry consolidation is inevitable and necessary, it may not occur in 2007, so takeover speculation is not the reason to buy.
"We would be buyers of the sector based on fundamentals more than possible industry consolidation," he said.
His top picks include AMR, Continental Airlines (nyse: CAL - news - people ), US Airways Group (nyse: LCC - news - people ) and Alaska Air Group (nyse: ALK - news - people ).
Airlines Drop To Buying Level
R.M. Schneiderman, 01.24.07, 11:06 AM ET
AMR
Continental Airlines
US Airways Group
It's a case of buy low, sell high. After airline stocks tumbled on Tuesday, they are now cheap enough to be attractive, according to a Wednesday report by Ray Neidl, an analyst for Calyon Securities.
Airline shares slid on Tuesday for a variety of reasons. UAL (nasdaq: UAUA - news - people ) reported disappointing earnings, AMR (nyse: AMR - news - people ) issued $13 million in common stock, the price of oil rose and there were reports that US Airways' latest proposal to acquire Delta Airlines would fail. (See "US Airways Sweetens Delta Bid")
Yet all of the above are reasons to buy, "We believe that these are all short-term events and represent a buying opportunity since we still see longer-term trends being positive," he said.
"The fact that higher oil prices drove down airline stock prices is no surprise. Our projections for the year assume high oil prices, so this does not affect our outlook."
Neidl also said that while industry consolidation is inevitable and necessary, it may not occur in 2007, so takeover speculation is not the reason to buy.
"We would be buyers of the sector based on fundamentals more than possible industry consolidation," he said.
His top picks include AMR, Continental Airlines (nyse: CAL - news - people ), US Airways Group (nyse: LCC - news - people ) and Alaska Air Group (nyse: ALK - news - people ).
