JetBlue Airways: Hold Rating with Potential Upside Amid New Management and Restructuring Efforts

In a report released yesterday, Jamie Baker from J.P. Morgan maintained a Hold rating on JetBlue Airways (JBLU – Research Report), with a price target of $7.00.

Jamie Baker has given his Hold rating due to a combination of factors related to JetBlue Airways’ position and potential in the airline market. Although the company’s improved earnings forecast for 2025 does not support a more bullish Overweight rating, JetBlue is seen as increasingly well-positioned for an upside, potentially exceeding consensus expectations in its upcoming 2Q guide. The airline has new management, which might bring a change from the previous higher tolerance for losses, and it’s also supported by an activist shareholder, showing signs of a more aggressive approach to managing the company. Additionally, JetBlue’s alignment with loyalty, premium, and international exposure, though less vigorous than the Big 3 airlines, gives it a distinctive position in the market.

However, Jamie Baker suggests that to justify an upgrade from a Hold to a more aggressive rating, JetBlue would need to achieve earnings closer to $1.00, which is significantly higher than the current forecast. Despite the airline’s restructuring efforts and a solid balance sheet, it is still grouped with struggling low-cost carriers, as evidenced by high short interest and unfavorable sell-side ratings. The report implies that while the airline has favorable tailwinds, such as a premium product and meaningful loyalty, its scale and impact in these areas are considerably less compared to major carriers. Consequently, Baker’s valuation framework sets a December 2024 price target of $7 for JetBlue, based on a sector-specific forward P/E and forward EV/EBITDAR assumptions, which reflects a cautious but not pessimistic outlook on the airline’s stock.

In another report released on April 9, Susquehanna also maintained a Hold rating on the stock with a $6.00 price target.

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JetBlue Airways (JBLU) Company Description:

JetBlue Airways Corp. provides air transportation services. It carries more than 30 million customers a year to 86 cities in the U.S., Caribbean, and Latin America with an average of 850 daily flights. The company offers flights and tickets to more than 82 destinations, with accommodations such as free TV, free snacks, and most legroom. JetBlue Airways was founded by David Gary Neeleman in August, 1998 and is headquartered in Long Island City, NY.