Spirit Airlines Analyst: Q4 Guidance 'Refreshingly Differentiated'

Spirit Airlines, Inc. SAVE reported third-quarter results on Wednesday along with a "refreshingly differentiated" outlook for the fourth quarter, according to JPMorgan.

The Analyst: Jamie Baker upgraded Spirit Airlines from Neutral to Overweight with a price target lifted from $19 to $25.

The Thesis: Spirit's fourth-quarter outlook implies operating revenue will be down 43% to 45% year-over-year versus Baker's prior estimates of down 53%, the analyst said in a Friday upgrade note.

This "welcomed, less-dire" outlook more than offsets management's guidance for slightly higher operating costs versus expectations, he said. 

Related Link: Why Spirit Airlines Stock Is Trading Higher Today

JPMorgan raised its EPS estimate from a $1.92 loss to a $1.27 loss, making Spirit the only airline for which the sell-side firm improved its fourth-quarter outlook, Baker said.  

The research firm also revised its 2020 liquidity forecast from $1.4 billion to $1.9 billion. This does not factor in potential proceeds from the CARES loan and is based on cash burn of $2.3 million a day, the analyst said. 

Finally, Spirit's product offering and lack of any meaningful exposure to international markets implies the company is operating from an advantageous position versus its peers when measured by an eventual return to profit, according to JPMorgan. 

SAVE Price Action: Shares of Spirit Airlines gained 3.11% in Friday's session, closing at $17.57. 

Benzinga file photo by Dustin Blitchok.