Shares rose 7%, or $1.44 a share, on Tuesday to close at $21.94, the highest close since a resounding 27% plunge on Jan. 30.
In premarket trading on Wednesday, shares were up 43 cents to $23.38.
In a Tuesday filing, Hawaiian updated first-quarter guidance toward improvements in the disappointing numbers it had provided in January.
The carrier now sees revenue per available seat mile down between 1.5% and 3.5%, an improvement over prior guidance of down 3.5% to 6.5%. It now sees cost per available seat mile excluding fuel down 1.5% to up 0.5%, better than prior guidance of up 1.5% to up 4.5%.
In other words, unit revenue is higher and unit costs are lower than what was projected in January.
In a report Tuesday, CRT Capital analyst Mike Derchin called Hawaiian "our favorite idea" and raised his price target to $37.
Shares are "currently trading 3.7x estimated '16 EBITDAR, by far the lowest valuation in the industry," Derchin wrote. "We would use the recent sell off to aggressively add to or initiate new positions."
Derchin is not new to this party. Immediately after the January decline, he issued a note that was headlined: "Buy aggressively on weakness."
Shares plunged in January because in a filing and on its earnings call the carrier delineated a list of problems including lower first-quarter RASM due to the strong dollar -- unfortunate in terms of ticket purchases by Asia-based passengers; a capacity increase on U.S.-Hawaii routes; and reduced fuel surcharges on Japan and Korean routes.
Shares closed at $26.62 on Jan. 29. The following day, they closed at $19.44. The low point was a trade of $18.01 on Feb. 18.
On Tuesday, Stifel analyst Joseph DeNardi wrote: "Perhaps HA's prior guidance was overly conservative and factored in a greater degree of pricing pressure than has materialized as a result of international fuel surcharges declining. Or perhaps the new markets that Hawaiian has opened on the West Coast have ramped up more quickly than expected.
"Whatever the reason, RASM down 2.5% at the midpoint, on 5% capacity growth and fairly significant headwinds from competitive capacity on the North America side and fuel surcharge declines internationally, is pretty solid," DeNardi said.
However, "despite the positive commentary in the investor update, we continue to see downside risk to pricing over the next six months given ramping competitive capacity on the North America market and the potential for fuel surcharge declines to pressure pricing internationally," DeNardi said.
He said the fuel surcharge on a Japan-Hawaii trip still adds about $200 to a round-trip fare, but will decline by about $60 on April 1, and could, he worries, decline farther. He has a hold on the shares.
In a report issued Wednesday, Imperial Capital analyst Bob McAdoo upgraded his rating on Hawaiian to outperform from inline and raised his price target to $27. "We expect investors to return to Hawaiian shares following more positive guidance," McAdoo wrote.
"Hawaiian has been successful in absorbing recent competitor capacity increases during the seasonally slower first quarter," he wrote. "Looking forward to seasonally stronger periods, competitive capacity growth appears manageable, with most new capacity coming to markets currently not served by Hawaiian."
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.