Imperial Capital Reiterates Price Target On Hawaiian Holdings

In a report out Monday morning, Imperial Capital analysts Bob McAdoo and Scott Buck went over Hawaiian Holdings. Inc.’s HA fourth-quarter results. The firm said EPS of $1.59 and revenues of $2.3 billion came in ahead of their expectations, but RASM (Revenue Per Available Seat Mile) headwinds have led them to trim their 2015 EPS estimates, and maintain an In-Line rating and $24 price target.

Shares are down more than 3 percent at $18.81, after tumbling 27 percent on Friday, on the back of “management commentary regarding the current environment and lower than expected RASM guidance [down 5 percent versus 1Q14 levels] for 1Q15.”

Related Link: Hawaiian Holdings Tumbles 27%, Most Airline Stocks Fall

The fall in RASM guidance seems to be driven by a combination of a stronger U.S. dollar (compared to other currencies), “a reduction in fuel surcharges to Japan and Korea which cannot be offset with higher base fares, and over capacity in West Coast markets.”

According to the report, Imperial Capital considers last week’s decline in share price to be an overreaction of the market, and thinks the stock will recuperate to pre-earnings levels as the seasonally stronger second quarter kicks in. Moreover, the company will benefited from lower oil prices and capex in 2015 and 2016. This suggests that “capital return to shareholders is possible, albeit with further deleveraging rather than more direct methods.”

However, over the longer term, McAdoo and Buck “remain somewhat hesitant given HA’s substantial future aircraft order book and potentially limited new market opportunities.”