WestJet: Analysts Raise Earnings Forecasts on 1Q Earnings Surprise

WestJet Airlines Ltd.’s (WJAVF.PK) “blow-out” first quarter earnings caused several analysts to increase their earnings forecasts Wednesday. However, most remained cautious about the impact rising fuel prices and a moderating economy will have on the Calgary carrier in the coming quarters.

Ben Cherniavsky, Raymond James analyst, increased his earnings estimate for 2008 to C$1.51, up from C$1.47 a share, but kept his forecast for next year intact at C$1.49 a share. He has a price target of C$19 on the stock.

In a note to clients he said:

Despite the exceptional operating performance achieve this quarter, our near-term outlook remains more tempered. In particular, the velocity at which fuel prices have soared in recent months presents a demonstrable headwind to overcome, particularly given the company’s unhedged fuel position.

Likewise, David Newman, National Bank Financial analyst, said he is cautious about the impact high fuel prices and a more challenging pricing environment will have in the second quarter. Nevertheless, he increased his earnings forecast for this year to C$1.37 a share, from C$1.28, and for next year to C$1.55, up from C$1.50 a share. He has a C$19 price target.

Chris Murray, CIBC World Markets analyst, was more bullish, increasing his forecast to C$1.57 a share this year, from C$1.39 a share, and to C$1.88 from C$1.63 a share in 2009. He has a price target C$24.

In a note to clients he said:

Management remains positive about their expectations for Q2, indicating that they are not seeing any apparent signs of a slowdown in demand. We believe they will be able to fill the additional 20% capacity growth planned for Q2 while continuing to gradually grow RASM.

Finally, Nick Morton, RBC Capital Markets analyst, increased his earnings estimate for this year to C$1.65 from C$1.62 a share, but decreased his 2009 estimate to C$1.85 from C$2. His C$25 price target remains unchanged.