We last visited Credit Suisse's airline analysts on August 13, keeping tabs on one of the most untimely calls I've ever seen. In "How (not) to Do Stock Price Forecasting- Credit Suisse Edition"
...The point is, fundamental analysis will help you avoid disaster but it doesn't forecast prices.That post was a follow-up to July 22nd's "Ahem... US Airways and UAL are Up... (LCC; UAUA)"
Thirty days ago Daniel McKenzie, airline analyst at Credit Suisse, cut his outperform ratings on Continental and American Airlines to neutral, after they had declined from $37.79 to $6.74 and $51.60 to $3.43 respectively.
The next day they bottomed out and are up 160% and 270% in the last thirty days.
So working at a big firm doesn't really help....
...56 and 57%, today. One of our loyal readers may be in the money in the "CNBC Million Dollar Challenge" because of "Dear CFTC: About those Oil Markets. And: A Stock Tip".Which was itself a follow-up to our July 14 post, "Ahead of the Bell: Credit Suisse cuts airlines (AAI: ALK; CAL; UAUA)"
We'll be setting up a PayPal account to celebrate his good fortune should he walk with any GE loot.
On the other hand, this untimely bastard may be out of a job. First he waits for the stocks to drop 90% before changing his ratings, then, well it doesn't get any worse (Monday, July 14, 2008):...
...The other two have similar trajectories, I'll stick with Dear CFTC: About those Oil Markets. And: A Stock Tip.Today ClusterStock gives us the update:
How often does an analyst have a Neutral rating on a stock when his/her price target is 50% below the stock price? When the analyst covers airlines.
Credit Suisse has reiterated its $9 target price on Continental Airlines (CAL), whose stock currently sits above $18. The analyst also thinks the stock could suddenly jump to $45. The bank's thesis is essentially that the oil crash is temporary and therefore to adjust the rating or target would be speculative:
Given macro volatility, our rating is temporarily misaligned with the downside to our PT [price target], tho the recent run in shares is consistent w/ our 7/30/08 trade alert where we pointed out that significant short term (i.e. 1-2 month) upside was likely given falling crude prices. We pointed out that under the scenario where crude prices fell to $100 thru 2009, we pointed out CAL could fetch $45/share (vs $14.21 at the time of our alert & $17.84 today). Our $9 PT is based on CAL's EV trading at 7.5x our 09E EBITDAR; we model crude at $130 in 2009 and believe it's too early to revise ests. given WTI volatility, tho will revisit soon....MORE