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Spirit upgraded by Raymond James; shares rise

NEW YORK (AP) -- Shares of Spirit Airlines Inc. rose Thursday after Raymond James upgraded the stock and said that fears of financial harm from Hurricane Sandy were overblown.

THE SPARK: Raymond James raised its rating on the discount airline to "Outperform" from "Market Perform," with a $21 price target.

THE BIG PICTURE: Florida-based Spirit Airlines has added service to several locations this year. It operates more than 200 daily flights to over 50 destinations within the U.S., Latin America and Caribbean.

It's known for offering low base fares and charging fees for bringing luggage or using other services.

THE ANALYSIS: Spirit canceled 134 flights, or 2.2 percent of its October schedule, because of Hurricane Sandy, which grounded virtually all flights at several big East Coast airports late in the month.

Raymond James analyst James Parker said concern about the storm's impact on earnings partially caused a sell-off in the stock on Wednesday. He estimated that Sandy would cut pretax earnings by $35 million, or 30 cents per share, but that would be just a one-time event.

In the meantime, he said, "Spirit's profit margins are among the highest in the industry and we believe the market niche pursued by Spirit is substantial and defensible." Parker said it was realistic for the company's size and earnings to grow by 15 to 20 percent over the next few years.

SHARE ACTION: Shares of the Miramar, Fla.-based airline rose $1.28, or 8.2 percent, to close at $16.99. In the past year they have ranged from $13.90 in January to $24.75 in May.