If you’re a trader, JPMorgan suggests getting on board with the airlines, pronto. They say the group is about to take-off!
Although the team of 3 analysts cited improved demand and capacity discipline, the driving catalyst behind the call was sharply lower fuel prices.
"Jet fuel prices have collapsed roughly 40 cents per gallon since February, representing, on an annualized basis, a nearly $5.5 billion windfall for the industry. And yet, since the end of earnings season, consensus has barely budged," write the analysts.
As a result, the team has revised price targets across the industry Take a look:
|JPMorgan 2012 |
Price Target Increases
|Alaska Air Group||$37.50||$39.50|
Should you follow JPMorgan into the airlines ?
If you’re a short-term trader, Brian Kelly says the thesis warrants further investigation. Demand has really stayed strong, he says, and with lower fuel prices, there’s a compelling case to buy.
However, if you’re a long-term investor trader Joe Terranova says there are better places to put money to work. He reminds the desk that airlines are typically trading stocks. Unless you’re nimble, I would not buy, he says.