The sell-off in the shares of Spirit Airlines Incorporated(NASDAQ:SAVE) last Friday has been deemed an overreaction and too harsh by analysts.
Citigroup which gave it as its opinion that the Friday sell-off was an overreaction has maintained its Buy rating on the stock and its $27 price target.
Analysts also felt that after falling so steeply the stock is now a good buy opportunity.
Shares in the airline operator fell 15 percent on Friday after the company gave a weak outlook for this year.
The Florida-based airline said that its revenue per seat mile - that is the money made on flying each passenger over a mile - would fall by between 2.5 and 4.5 percent in 2012.
One of the reasons cited for the lower revenue was the impact of Hurricane Isaac, which had grounded several flights. Another reason was a tax reprieve in August last year that would lead to a lower figure this year.
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Last year, a federal excise tax in the third quarter benefited the company, boosting its revenue per seat mile by 28.4 percent. Hurricane Isaac contributed to a decrease in the airline’s load factor by 1.2 percentage points to 86.5 percent.
Citi's Stephen Trent said that the market had misread the company's forecasts and way the airline generated revenues from passengers.
According to Trent, passenger revenues would not have any significant impact on the earnings of the airline - at least not to the extent that the market believes.
The stock gained 35 cents, or 2.1 percent, to $16.93 in premarket trading Monday. At that level, its shares are up 58 percent from a 52-week low of $10.73 last September. They traded as high as in early May.
Spirit Airlines operates in 48 airports across the United States, the Caribbean and Latin America