To say the last year-and-a-half has been turbulent for airline companies would be an understatement. The COVID-19 pandemic introduced global government-mandated lockdowns, many companies kept their employees at home, and leisure travel nearly ground to a halt. As the pandemic persisted, many people learned to live with the virus, and the pent-up demand for travel was unleashed in between waves of viral variants.
Currently, many people are traveling more than they did a year ago. However, with the summer travel season behind us, airlines may see fewer passengers, because workers have been returning to their jobs. Additionally, fuel prices have spiked over the last month, as supply is gobbled up by reopened economies.
Discerning which airline stocks to invest in can be a daunting endeavor, as the companies are typically large and are subject to several macroeconomic forces. This is where TipRanks new Website Traffic tool comes in. The financial aggregator site has teamed up with SEMrush (SEMR) to provide statistical analyses on visits to companies’ websites.
Considering that airlines often rely on their websites for ticketing, payment, and customer service processes, analyzing website visits can provide alternative insight into how an airline has been performing. Let’s take a look at what the data says, and compare it to hypotheses from professional financial analysts.
American Airlines
A major player in the U.S. airline industry, American Airlines, Inc. (AAL) has seen its fair share of downside over the last few months. The stock saw a large spike in valuation between May and June of 2020, when investors were anticipating a robust airline summer recovery from COVID-19 lockdowns. Unfortunately for AAL, this was the peak.
Soon thereafter, investors were shaken off by fears induced from the Delta variant, the spread of which thrust more countries into lockdowns and stifled travel plans worldwide. American Airline’s valuation has been relatively steady since, albeit in a bearish pattern.
From examining data on aa.com, it can be inferred that visits to the website moved nearly in tandem with the stock’s valuation. From Q2 to Q3, total visits on all devices have declined -5.87%, while the share price has fallen –3.25%. Meanwhile, when comparing the year-to-date ranges of 2020 and 2021, the data shows a 22.86% gain in total device visits. This shows a robust long-term recovery from last year’s pandemic depths.
See more on TipRanks’ Website Traffic tool >>
Coverage of American Airlines was recently conducted by Sheila Kahyaoglu of Jefferies Group, who wrote that “AAL may be the best positioned of the network carriers, with the youngest fleet and a strong competitive positioning through its network, with the restrictive nature of AAL’s leverage keeping us on the sidelines.”
Kahyaoglu rated the stock as a Hold, and provided a price target of $20. This target came as a downgrade from her previous one at $24 per share, and currently represents a potential 12-month upside of 2.9%. The average American Airlines price target is $18.79, representing a possible 12-month downside of -1.26%.
On TipRanks, AAL has an analyst consensus rating of Hold, based on 2 Buy, 2 Hold, and 4 Sell ratings.
Southwest Airlines
A comparable yet distinctively different airline, Southwest Airlines Co.’s (LUV) share price has been through a saga of its own. The world’s largest low-cost carrier experienced a similar wave of investor interest in the first half of 2021, wherein its shares rose about 45% from late January lows to their early April highs. Similarly to AAL, the Delta variant brought investor woes to Southwest and the share price declined in a consistent fashion.
However, LUV’s shares rose again in late September and peaked in mid-October, before falling again. This movement corresponded with the climbing prices of fuel and oil, which brings down airlines’ gross margins. The share price has been on the decline ever since.
Taking a look at the website data on TipRanks’ traffic tool provides further understanding of the situation. Quarter-over-quarter, visits to southwest.com from all devices have declined –7.12%, while the share price has moved down -3.13%. Additionally, comparing the year-to-date ranges of 2020 and 2021, visits to the airline’s website have increased a significant 10.75%, corresponding with the emergence from the pandemic.
An expert in airline stock analysis, Sheila Kahyaoglu of Jefferies Group covered Southwest in her recent report. She was bullish on LUV, writing that the company has expanded aggressively in the U.S. throughout the pandemic and is poised to emerge as a much more major player in its industry. She added that “the airline is well-capitalized and will be the first to return to shareholders,” and that “the longer-term opportunity for LUV remains attractive.”
The four-star analyst reiterated a Buy rating on the stock, and declared a price target of $60.
On TipRanks, LUV has an analyst rating consensus of Strong Buy, based on 14 Buy and 2 Hold ratings. The average Southwest Airlines price target is $62.40, indicating a potential 12-month upside of 33.99%.
Disclosure: At the time of publication, Brock Ladenheim did not have a position in any of the securities mentioned in this article.
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