NEW YORK (TheStreet) -- Shares of Spirit Airlines  (SAVE) are down by 3.92% to $38.23 in afternoon trading on Monday, after the airline's rating was cut to "peer perform" from "outperform" by analysts at Wolfe Research, according to Barron's.

Analysts at the firm lowered their rating after American Airlines (AAL) indicated that it would be willing match the prices from discount airlines such as Spirit in an earnings call today.

"The competitive dynamic. American Airlines' earnings call, which we were waiting to hear before we made this decision, did nothing to dissuade us from our opinion that American Airlines views Spirit as a strategic threat," analyst Hunter Keay said.

"American Airlines was unapologetic about its willingness to match almost any local ULCC fare. We see no reason why this should change without higher fuel prices. Even if American Airlines gets more surgical on how it sells these fares, matching seems likely to continue," Keay continued. 

Separately, TheStreet Ratings team rates SPIRIT AIRLINES INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

We rate SPIRIT AIRLINES INC (SAVE) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 7.5%. Since the same quarter one year prior, revenues rose by 10.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.42, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, SAVE has a quick ratio of 1.51, which demonstrates the ability of the company to cover short-term liquidity needs.
  • SPIRIT AIRLINES INC has improved earnings per share by 19.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SPIRIT AIRLINES INC increased its bottom line by earning $3.06 versus $2.43 in the prior year. This year, the market expects an improvement in earnings ($4.06 versus $3.06).
  • Net operating cash flow has significantly increased by 141.20% to $129.04 million when compared to the same quarter last year. In addition, SPIRIT AIRLINES INC has also vastly surpassed the industry average cash flow growth rate of 44.68%.
  • 35.84% is the gross profit margin for SPIRIT AIRLINES INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 13.85% trails the industry average.
  • You can view the full analysis from the report here: SAVE