Hudson Decreases PT on US Airways to $13 (LCC)

Hudson is out with its report today on US Airways LCC, decreasing its price target from $14 to $13. In a note to clients, Hudson writes, "The $100M or $0.35 reduction to our 2011 EPS estimate from higher fuel expense equals 0.8% of our 2011 revenue outlook, admittedly a rounding error in the context of revenue & fuel price volatility, but nonetheless sufficient to cause us to trim valuation. Thus, our new $13PT (vs prior $14) is based on the carrier's enterprise value trading a 5.6x our 2011E EBITDAR estimate. We expect shares to remain under some pressure near-term given a reduced earnings outlook; however, earnings catalysts lead us to conclude the 20% upside to our target price continues to justify a Buy rating." At the time of posting, LCC is trading at $10.91, up 1.02% from Wednesday's close.