Republic Airways Holdings Inc., Delta Air Lines, Inc. Join in Sector Surge

Republic Airways Holdings Inc. (NASDAQ:RJET) and Delta Air Lines, Inc. (NYSE:DAL) are among the airline stocks breaking out today

by Alex Eppstein

Published on Sep 4, 2015 at 12:26 PM
Updated on Sep 4, 2015 at 1:35 PM

While the broader market is languishing on the latest payrolls report, airline stocks are outperforming -- in no small part due to positive analyst attention, which has even extended to smaller carriers. Among the names sporting solid intraday gains are Republic Airways Holdings Inc. (NASDAQ:RJET) and Delta Air Lines, Inc. (NYSE:DAL).

Despite ongoing labor turmoil and bankruptcy fears, RJET is flirting with an 8% lead at $3.27. This represents quite the break from the stock's prevailing trend lower. So far in 2015, the shares have lost more than three-quarters of their value.

Not surprisingly, sentiment has turned increasingly bearish toward RJET. During the last two reporting periods, short interest soared close to 45%. Similarly, over the last 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security has racked up a put/call volume ratio of 0.27 -- in the 78th annual percentile.

On a related note, Republic Airways Holdings Inc.'s Schaeffer's put/call open interest ratio (SOIR) of 1.08 rests just 2 percentage points from a 52-week peak. In other words, traders targeting options in the front three-months' series have rarely been as put-skewed as they are now.

Meanwhile, sector peer DAL is 1.6% higher at $45.80, following a price-target hike to $65 from $62 at Evercore ISI. Longer term, the stock has struggled -- down nearly 7% in 2015 -- but it has picked up steam recently. Specifically, during the last three months, DAL has outperformed the broader S&P 500 Index (SPX) by 19.4 percentage points.

Apparently, the brokerage crowd has gotten the memo. All 13 analysts tracking the shares have doled out "buy" or better evaluations. Similarly, Delta Air Lines, Inc.'s 50-day ISE/CBOE/PHLX call/put volume ratio of 5.38 indicates more than five calls have been bought to open for every put during the prior 10 weeks. In fact, this ratio outstrips nearly four-fifths of comparable readings from the last year.

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