Spirit Airlines Stock Draws Bear Notes After Slashing Forecast

Year-over-year, the security still sports a 40.1% lead

Digital Content Manager
Aug 17, 2021 at 10:28 AM
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The shares of Spirit Airlines Incorporated (NYSE:SAVE) are up 1.4% to trade at $24.61 at last check, making a comeback from an earlier dip despite news that the low-cost carrier lost $50 million due to operational problems. As of late, the company has experienced staffing, technical, and weather issues, resulting in over 2,800 cancelled flights between late July and early August. Plus, Spirit Airlines cuts its revenue and margin forecast for the third quarter, as surging Covid-19 cases negatively impact booking trends.

The brokerage bunch is already chiming in on this update with bear notes. Specifically, the security received price-target cuts from Deutsche Bank and Citigroup to $36 earlier today. Analysts are split towards the equity, with six calling it a "strong buy," while six say "hold." Meanwhile, the 12-month consensus target price of $38.10 is a 57.8% premium to current levels, suggesting even more price-target cuts may be lurking in the stock's horizon.

While shorts have been hitting the exits, many are still celebrating today's early trading trough. Short interest dipped 14.3% in the last two reporting periods, yet the 5.46 million shares sold short make up 5.1% of the equity's available float. 

The options pits lean bearish. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SAVE's 10-day put/call volume ratio stands higher than 97% of readings from the past year. Echoing this is the stock's Schaeffer's put/call volume ratio (SOIR), which sits higher than 92% of readings in its annual range. This means traders have rarely been more put-biased toward Spirit Airlines stock.

The security has trended lower since surging to a March 18, annual high of $40.75. And while the 20-day moving average supported shares through that rally, it stepped in as a level of resistance in June, and has been keeping a tight lid on shares ever since. Longer term, Spirit Airlines stock sports a 41.5% year-over-year lead.

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