NEW YORK (
) -- Here's what Wall Street analysts are saying about airline stocks, software sales, lumber prices and more. Investing ideas for Friday, Jan. 20:
1.) Take another look at the airline sector
JP Morgan is getting slightly more bullish on the airline sector. "We are substantially revising our 2012 assumptions, moving away from recessionary inputs for the first time since September 2011," said the firm in a recent research note.
The airline industry may be headed for a third straight year of profits even though fuel prices are rising. Some of the difficulties that have cut into airline growth in 2011 were austerity measures in the eurozone, changes in regulation, new taxes and of course, the Japanese earthquake and tsunamis. Despite the threat of more challenges going forward, however, JP Morgan is upbeat. "Historically, just one of these curve balls could have proved highly damaging. But today, the barrage of exogenous shocks hasn't yet managed to derail profitability," it says.
JP Morgan is revising it macroeconomic forecast, including bumping up its estimate for 2012 oil prices to $105, after projecting $85 last September. The firm also estimates the U.S. economy to growth at a rate of 3.9% in nominal terms. These two factors will boost airline revenue to plus 5% from an initial flat estimate, says the firm.
At the same time, JP Morgan reminds investors that earnings estimate for airline stocks shouldn't change by much. "Our estimates are merely trimmed and our thesis remains the same."