Southwest Airlines is preferred over Allegiant Travel at Evercore ISI

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Evercore ISI adjusted estimates across the U.S. airline sector after noting strong demand and factoring in what it expects will be a transitory spike in fuel prices.

The firm boosted its rating on Southwest Airlines (NYSE:LUV) to Outperform from In-line.

"While reliability remains a priority, Southwest appears margin recovery focused and must be considering the volatile inputs that the rest of the world can see too. Greater relative financial strength + margin focused planning lead us to raise our rating."

Evercore ISI lowered the rating on Allegiant Travel Company (NASDAQ:ALGT) to In-line from Outperform.

"We appreciate Allegiant’s nimble, flexible model and will look to revisit the name as staffing constraints are addressed, reliability confidence is restored and Sunseeker resort P&L ramp visibility has increased (though we view resort as accretive longer term, and more valuable today vs. initial conception given sharply higher land value)."

Shares of Southwest Airlines (LUV) rose 1.61% in premarket trading, while Allegiant Travel (ALGT) fell 0.15%.

See Seeking Alpha Quant Ratings across the airline sector.