U.S. airline stocks are expected to post their best monthly performance since 2021 on Friday, helped by lower fuel prices and signs of strong travel demand during the summer season.
The post-pandemic rebound in travel spending has held steady despite rising inflation and signs of a slowing economy. The number of Americans traveling by air for the July 4 holiday is expected to surpass the previous record from four years ago.
The outlook for the rest of the summer is also promising. A record 256.8 million passengers will fly in the June-August quarter, up 1% from the same period in 2019, industry group Airlines for America estimated.
“Rising stock markets and money market fund returns could boost the purchasing power of those lucky enough to own such assets,” said Russ Mould, chief investment officer of AJ Bell.
The S&P 1500 airlines index has jumped 21.3% so far in June, its highest level since February 2021 and far ahead of the 5.2% rise in the S&P 500 index.
Delta Air Lines upgraded its quarterly profit outlook and forecast upbeat annual results this week, while the CEO of United Airlines said in early June that the United States was in a “trade recession”, but the consumer was “strong”.
Raymond James and Bank of America raised their 2023 forecast for U.S. carriers in their coverage this week to account for lower fuel costs late in the quarter.
However, Savanthi Syth, an analyst at Raymond James, expects air travel demand to decline in the second half, given the high level of uncertainty and limited visibility in the fall.
Shares of United Airlines and Delta are trading at 5.2 and 7.0 times forward earnings, respectively, well below the S&P 500 multiple of 19.1. Despite slashed valuations, the sharp rise has sparked interest of some bearish investors.
“All travel-related stocks trade like AI stocks, which they don’t,” said Matthew Tuttle, CEO of Tuttle Capital Management, adding that he would be looking for opportunities for sell short.
Meanwhile, electric air taxi Joby Aviation jumped 58% this week and was set to deliver its best weekly performance after the US aviation regulator gave the go-ahead for flight testing. attracted individual investors.
Joby was the third most traded stock by retail investors during Thursday’s session, according to data from JP Morgan.
2023-06-30 13:24:50
#Airline #stocks #track #month #years #summer #crowds #fuel #prices
