As Q3 earnings season approaches for airline stocks, Credit Suisse analyst Julie Yates remains positive on most of the major names in the space, but believes that performance throughout the rest of the year will likely not be very impressive. In a new report, Yates discusses what’s ahead for airline investors in Q4 and 2016 and which stocks traders should be buying now ahead of Q3 earnings.
Q3 Expectations Are Low
According to Yates, Credit Suisse believes that Q3 earnings expectations for the airliners are relatively low due to fears surrounding the revenue environment and concerns that PRASM forecasts for Q4 could be nearly as bad as Q3 PRASM declines were.
“Retention of initial Q3 PRASM guides suggest some stability, but investors remain skeptical that international capacity cuts at the legacies and easing comps are enough to offset softening yields in a lower fuel environment,” Yates explained.
Prior to the quarter, consensus expectations were that Q3 would represent the trough in year-over-year unit revenue growth for airlines.
Modest Improvement
With expectations low heading into Q3 earnings season, Yates believes…
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