Continental Q1 Earnings Preview: Stock Already Reflects Good News

Continental Airlines (NYSE: CAL) is set to report its Q1 earnings tomorrow - April 22 - before the market opens for trading. Wall Street analysts are expecting CAL to have earned $0.80 per share on revenues of $3.15 billion. The consensus expectations range from $0.96-$0.40 for earnings on revenues of $2.98-$3.21 billion.

In the prior quarter, Continental Airlines had reported mixed results. Although CAL’s earnings beat expectations, revenues missed. Since then, CAL has advanced roughly 20% and made a new 52-week high of $24.29. However, the company’s shares came down from their highs last week after volcanic activity in Iceland disrupted the airline business.

Despite the pullback in share price, investor sentiments for the stock continue to be positive due to a gradual increase in traffic during the quarter. An article on Reuters had indicated that airlines had started to climb out of the recession phase and were recording strong increases in passenger travel. This observation was confirmed when Continental posted a 5.2% year-over-year increase in its March traffic.

Continental Airlines was recently upgraded by Stifel Nicolaus to “buy” from “hold.” Jesup & Lamont had also raised its target price for CAL to $26 from $22, while reiterating its “buy” rating on March 16. Since the stock has nearly doubled over the past six months, a large part of the good news is already discounted in the share price.

More Analyst Ratings here.