) to overweight from neutral.
Analyst Bob McAdoo says even though Pinnacle will likely earn $2.36 in 2005 (or $3.20 excluding special items), the shares have fallen to 3.7 times his $2.36 2005 estimate, in concert with decline of Northwest Airlines (NWAC
) shares, its code share partner. He thinks the drop likely resulted from uncertainty surrounding the outcome of Northwest Airlines union negotiations, the need for pension reform legislation, and the potential of a Northwest Chapter 11 filing.
McAdoo doubts Northwest will file for bankruptcy protection, but even if Northwest were to file, Pinnacle's EPS stream would likely remain intact and the shares would likely rebound post-filing. He keeps a $16 price target on the stock.