Earnings Preview: Continental Airlines

Apr.21.10 | About: United Continental (UAL)

Continental Airlines (NYSE:CAL) is expected to report Q1 earnings Thursday, April 22 before the market open, with a conference call scheduled for 10:30 am ET.

Guidance

Analysts are looking for EPS of (80c) on revenue of $3.15B. The consensus range is very wide at (96c)-(40c) for EPS, and $2.98B-$3.21B for revenue, according to First Call. Continental reported mixed Q4 results beating EPS but missing revenue estimates. Since then the stock has rallied about 20% to a recent 52-week high of $24.29. Last week it came off its highs mainly due to the volcanic activity in Iceland which cast some doubt on the airline business. Despite the small pullback recent sentiment has been positive as traffic has gradually increased during the quarter. A March 30 Reuters article noted that the airlines were beginning to climb out of the recession and recording strong increases in passenger travel. This was confirmed with Continental’s March traffic which increased 5.2% year-over-year.

Analyst Views

The company was upgraded to Buy from Hold at Stifel Nicolaus on April 12. On March 16 Jesup & Lamont raised its target on the shares to $26 from $22 and reiterated its Buy rating. Sentiment on the stock has been overwhelmingly positive and it has nearly doubled in the last six months. As such, a wealth of good news has already been discounted in the shares.