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J.P. Morgan’s Jamie Baker soars to the summit for a fifth year in a row. “The industry is finally being run like a real business, as opposed to a hobby,” the 44-year-old observes. “Over time we expect share prices to reflect increasing earnings stability.” Baker’s top pick is Atlanta-based Delta Air Lines, where an “unemotional” executive team “is focused on repairing its balance sheet and achieving sustained returns on capital,” he says. Delta’s stock was trading at $8.65 in late August; Baker has a target price of $17.50. He is also bullish on United Continental Holdings, even though the Chicago-based carrier’s shares lost nearly one quarter of their value in July. “United is being punished for its industry-lagging profit margins,” the analyst explains. “But the majority of its problems appear self-inflicted, and we tend to gravitate toward names where management has the ability to address deficiencies — as opposed to fuel or demand issues, which are outside their control.” At the end of August, United’s stock stood at $18.45; Baker’s target price is $29. “His calls are very timely,” attests one backer. |
Consumer – Airlines: First
