Deutsche Bank: Spirit Airlines An Earnings Growth Story, Initiated 'Buy'
Monday, January 30, 2022 1:43 PM

Deutsche Bank (DB) initiated coverage of Spirit Airlines Inc. (NASDAQ:SAVE) with a "Buy" rating and price target of $24.

Michael Linenberg, an analyst at DB, wrote that his thesis is supported by consistently profitable with returns that are industry-leading, low cost producer with distinctive revenue model, significant growth opportunities and strong liquidity position coupled with no debt on the balance sheet.

The combination of the above should result in meaningful shareholder wealth creation for the foreseeable future, Linenberg said.

Spirit is very much an earnings growth story having gone from just above breakeven results in 2007 to $84 million in net income projected for 2011, he wrote. Operating margins have expanded from 2.9% in 2007 to 8.6% in 2010 (12.3% adjusting for impact of pilot strike). For 2011, Linenberg projects operating margin of 13.8%.

"Presently, Spirit is among the lowest cost producers of scheduled US airline capacity. This is achieved via high aircraft utilization accompanied by what we believe is the most dense seating configuration of any US airline," Linenberg wrote.

The stock, which has been trading in the 52-week range between $10.18 and $17.48, is currently trading 1.1 percent higher at $16.41.