The Zacks Analyst Blog Highlights: United Continental Holdings, Southwest Airlines, Delta Airlines, American Airlines Group and International Paper
CHICAGO, June 12, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the United Continental Holdings Inc. (NYSE:UAL-Free Report), Southwest Airlines Co. (NYSE:LUV-Free Report), Delta Airlines Inc. (NYSE:DAL-Free Report), American Airlines Group Inc. (Nasdaq:AAL-Free Report) andInternational Paper Company (NYSE:IP-Free Report).
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Here are highlights from Wednesday's Analyst Blog:
Airline Stock Roundup
Airline stocks reflected a mixed trend in the past week's trading sessions. While some stocks reacted positively to the International Air Transport Association (IATA) data, some stocks recorded a lackluster week.
Stocks like United Continental Holdings Inc. (NYSE:UAL-Free Report) andSouthwest Airlines Co. (NYSE:LUV-Free Report) made headlines for gaining altitude in share prices. Delta Airlines Inc. (NYSE:DAL-Free Report) was also in the limelight for its deal with Airbus.
Recap of Last Week's Most Important Stories
1. One of the major events past week was the International Air Transport Association's (IATA) profit guidance. Last week, IATA announced its 2014 profit outlook for the global airline industry, which has been trimmed down by $700 million from the previous forecast to $18 billion. While IATA chief economist Brian Pearce remains hopeful about the performance of Middle East and North American aviation companies, a slowdown in China's economy and volatile global trade are key factors that force a conservative outlook on this year's industry profits.
2. United Continental gained significant momentum on Monday last week driven by IATA's bullish view on the North American airline industry. The stock gained $2.33 or 5.25% on Jun 2 in NYSE. Notably, the Chicago-based carrier also ended the day substantially higher than the NYSE Composite. (Read More: United Continental Shares Gain Altitude)
3. Another major airline that registered a notable takeoff was Southwest Airlines, which reached a fresh 52-week high of $27.22 last week on Jun 3, before closing the trading session a little lower at $27.20. This reflected a solid return of over 95% in the past 12 months. Moreover, the company's expected long-term earnings growth rate of 30.8% also makes the stock appear attractive. (Read More:Southwest Airlines Hits 52-Week High Anew)
4. Last week, Delta Airlines announced plans to purchase 15 new jets from Airbus in a deal worth $1.65 billion. The company has ordered 15 narrow bodied A-321 aircraft, with deliveries scheduled 2018 onward. This fleet will replace some of Delta's less efficient domestic aircraft. (Read More: Delta Extends Airbus Order)
Delta Airlines also reported its traffic for May 2014, which was driven by strong demand in both the domestic and transatlantic markets. Strength in Atlanta, New York and Seattle boosted the carrier's performance and airline traffic moved up 5.8% year over year to 17.73 billion.
5. Another major news from the past week include American Airlines Group Inc. (Nasdaq:AAL-Free Report) subsidiary U.S. Airways' Codeshare Agreement with Air Berlin PLC & Co, which is also a member of Oneworld airline alliance. The new agreement will foster relation between the two air carriers and provide passengers of U.S. Airways better access to Germany and other European destinations.
International Papers' Veritiv to Trade June 18
International Paper Company (NYSE:IP-Free Report) announced the timing with regard to the upcoming merger of its distribution solutions business, xpedx, with UWW Holdings, Inc. The new publicly-traded company, Veritiv Corporation, to be formed as a result of the merger will begin trading on a 'when-issued' basis on New York Stock Exchange (NYSE) under symbol 'VRTV WI' on June 18.
Thereafter, on Jul 2, 2014, the company will commence regular trading under the ticker 'VRTV.'
The board of directors of International Paper has declared that its shareholders as of Jun 20, 2014, will be entitled to receive 8.16 million shares of Veritiv's common stock, under a pro rata distribution system. The distribution ratio is estimated to be around 0.0188 shares of Veritiv common stock for each share of International Paper, calculated on the basis of the latter's common stock currently outstanding. The distribution is subject to certain conditions.
Any fractional shares of Veritiv common stock will be aggregated and sold in the open market, with the resultant proceeds being distributed in cash to relevant shareholders on a pro rata basis.
International Paper had announced the spin-off of its struggling xpedx distribution business in a tax-efficient transaction under a Reverse Morris Trust structure in January. Per the deal, xpedx will merge with UWW Holdings, the parent company of Unisource Worldwide, to form a new entity, Veritiv Corporation. International Paper will receive $400 million in cash and own 51% stake of the new company, and UWW Holdings will own the remaining stake.
Following the completion of the merger, Veritiv will own and operate the combined distribution solutions businesses of xpedx and Unisource. It will provide end-to-end print, packaging facility and logistic solutions to customers, by leveraging its extensive geographic reach, rich product portfolio and differentiated service platform.
North America-based Veritiv's annual revenues are projected to be in the range of $9 to $10 billion. The merger is expected to generate about $150 million to $225 million in annual net synergies.
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