D.A. Davidson & Co. has increased its forecast of the earnings of Spokane-based Ambassadors Group Inc. for this year and 2006 and has raised its 12- to 18-month target price for the travel companys stock.


D.A. Davidson, the Great Falls, Mont.-based regional brokerage, says it now expects Ambassadors to earn $1.80 a share in 2005, up from the $1.74 a share that it had projected earlier. The brokerage increased its forecast for Ambassadors 2006 earnings to $2.05 a share, up from $2, and raised its target price for Ambassadors stock to $35 share from $34. The Spokane companys stock closed last week at $33.25 a share.


Ambassadors organizes and promotes international and domestic travel programs for students, athletes, and professionals. D.A. Davidson says it increased its projection of the companys 2005 earnings based on an assumption that Ambassadors will boost the number of participants in its programs by 18 percent this year.


Given the 2,500 delegates who traveled in Ambassadors programs in the first quarter, and the enrollees who are signed up to travel later in the year, Ambassadors overall enrollments so far for 2005 travel were at 38,000 recently, up 23 percent from a year ago, although the company will have some cancellations, D.A. Davidson says.


Yet, the travel business remains volatile, and D.A. Davidson analyst James L. Bellessa Jr. writes, A partial offset to higher revenues from a larger number of travelers will be weakness in the U.S. dollar and fuel surcharges for travel, which the company is not fully able to pass along to program participants.


Jeff Thomas, Ambassadors CEO and president, says airlines are slapping fuel surcharges on travelers without warning, and unlike in the past, theyre hitting travel groups such as Ambassadors with those surcharges. In addition, over the last three years the U.S. dollar has fallen 40 percent against key currencies, such as the euro, the Australian dollar, and the pound sterling, in which Ambassadors pays for many goods and services abroad.


Since the Sept. 11, 2001, terrorist attacks, weve had war in Iraq, SARS, the tsunami, a number of terrorist acts, and the 40 percent decline in the dollar, Thomas says. Still, he says, long-term travel trends look strong. There has been an upsurge in interest in getting out and seeing the world.


Bellessa says that with $37.2 million in deployable cash as of March 31, up from $28.2 million a year earlier, Ambassadors has the wherewithal to invest in growth opportunities, although in the past it has been prone to do that by developing travel programs internally rather than by making acquisitions.