Spirit Airlines (NYSE: SAVE) Downgraded to Strong Sell by Citigroup Analyst

Citigroup's Stephen Trent downgraded their rating on Spirit Airlines (NYSE: SAVE) from Hold to Strong Sell on 2024/01/18. The analyst also lowered their price target by 69.2% from $13 to $4.

Trent expressed skepticism regarding JetBlue and Spirit's potential appeal of the court ruling blocking their proposed merger. "It is unclear why JetBlue wouldn't cut its losses here and recognize that it avoided a risky bid on a highly levered carrier with steep losses," Trent said. The analyst advised investors to expect both carriers to go their separate ways.

Trent also commented on the possibility of a new bid for Spirit Airlines, stating that it is unlikely without the carrier first restructuring its debt. He highlighted the company's mounting net debt, which has increased from $3.3 billion to $5.5 billion over the past two years, as well as the fact that the carrier's EBITDA is not expected to turn positive until 2025. The soaring bond yield, which has surpassed 40%, further adds to the challenges Spirit Airlines faces in attracting another merger bid, according to Trent.

The analyst's downgrade aligns with the current sentiment among top-rated analysts. None of the top-rated analysts currently rate SAVE as a Strong Buy or Buy, and there are no analysts who consider it a Hold. In fact, 100% of analysts either recommend or strongly recommend selling the stock.

Spirit Airlines' stock performance has been lackluster in recent months. Since the company's last quarterly report on 2023/09/30, the stock price has plummeted by 65.5%. Year-over-year, the stock has experienced a decline of 72.6%. These figures indicate that SAVE is trailing behind the performance of the S&P 500, which has only seen a 21.7% decrease during the same period.

Stephen Trent, the Citigroup analyst responsible for the downgrade, is ranked in the top 26% among Wall Street analysts by WallStreetZen. With an average return of 3% and a 44.4% win rate, Trent specializes in analyzing the Industrials and Utilities sectors, among others.

Spirit Airlines Incorporated, formerly known as Clippert Trucking Co., operates flights between major cities in the United States and popular vacation destinations in the Caribbean and Latin America. The airline serves 85 destinations across 15 countries and operates an all-Airbus fleet consisting of 175 single-aisle aircraft in the A320 family. Spirit Airlines adopts an ancillary service model, charging passengers separately for baggage, advanced seat selection, and other travel-related upgrades. Founded in 1964, the company is headquartered in Miramar, FL.

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