Analysts See Clear Skies Ahead For These 2 Airline Stocks

Both LUV and UAL received price-target hikes to $74

Managing Editor
Jan 10, 2018 at 10:03 AM
facebook X logo linkedin


Two airline stocks are higher this morning, after analysts issued some lofty price-target hikes. Southwest Airlines Co (NYSE:LUV) received price-target hikes to $74 from both Raymond James and Barclays. Not to be left out, United Continental Holdings Inc (NYSE: UAL) also received a price-target hike to $74 from Cowen and Company, after the airline reported well-received December traffic metrics. 

Analysts See Record Highs On the Horizon for LUV Stock

The new price targets would represent a fresh record high for Southwest Airlines stock, which at last check was up 0.3% to trade at $62.58. LUV stock has tacked on 22% year-over-year, and ascended to a record high of $68.98 on Dec. 21, with the airline an expected benefactor of the new Republican tax plan. Yesterday, however, the stock dipped, as oil prices touched three-year highs and after Southwest reported December traffic.

Options traders haven't been deterred by the recent LUV pullback. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows an influx of calls bought to open during the past two weeks. Southwest Airlines stock's 10-day call/put volume ratio of 4.14 ranks in the 85th annual percentile, suggesting that calls have been bought to open over puts at a faster-than-usual pace in the past two weeks.

Plus, the stock's inflated Schaeffer's Volatility Scorecard (SVS) of 95 indicates the airline stock has handily exceeded options traders' volatility expectations in the past year -- a boon to would-be premium buyers.

UAL Stock Nudges Past $70 Level 

Cowen and Company's price-target hike stems from United Continental's monthly operational performance report, which showed increases in revenue passenger miles and available seat miles in December. As a result, UAL stock is up 4.6% to trade at $71.84 this morning. The shares are now on pace to topple the $70 level for the first time since July, and have tacked on 27% since falling to an annual low of $56.51 on Nov. 15.

In the options pits, United Continental stock sports a Schaeffer's put/call open interest ratio (SOIR) of 1.21, which ranks higher than 98% of all other readings from the past year. This indicates that short-term options traders have rarely been more put-heavy on UAL stock in the last 12 months. 

Echoing that, the equity's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.68 is also in the 98th percentile of its annual range, pointing to accelerated put buying over call buying lately. Should UAL shares extend their recent journey higher, an unwinding of pessimism in the options pits could translate into added tailwinds.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI