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Airline Stocks Soar; Zynga and Groupon Get a Boost

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Airlines higher: Morgan Stanley says "Rally Has Legs."

Airlines bucking the lower trend this morning: Delta (DAL), United Continental (UAL), US Airways (LCC), and Republic Airways (RJET) rise three to four percent.

Morgan Stanley made comments on airlines this morning, saying: "We continue to expect the stocks to grind higher from here in the shorter-term."

One immediate catalyst was Delta, which restarted its dividend on May 8. And while many airlines are at or near new highs, "We do not see a setup for a material short-term pullback in shares," adds Morgan Stanley.

The reasons:

  1. Oil is higher, but jet fuel prices have not increased with it;
  2. Expectations that passenger revenues will strengthen in May, June, and July versus prior months


Elsewhere: Zynga (ZNGA) and Groupon (GRPN) haven't had much good news recently, but they got it this morning. Activist investment firm Jana Partners, controlled by Barry Rosenstein, revealed new stakes in both companies, and fairly large positions: 21.9 million shares for Groupon (3.3 percent of outstanding shares), 25.4 million shares for Zynga (3.1 percent of outstanding shares). Both are up about six percent.


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