JetBlue Airways Upgrade Based On 5 Potential Earnings Levers

Trends in JetBlue Airways Corporation’s JBLU core markets are improving, according to Raymond James, and the company could record normalized margin expansion if it can execute on a few “earnings levers.”

The JetBlue Airways Analyst: Savanthi Syth upgraded the rating for JetBlue Airways from Market Perform to Outperform, while keeping the price target unchanged at $24.

The JetBlue Airways Thesis: The company’s daily bookings accelerated from around $6 million in early March to between $10 million and $12 million towards the end of the month, Syth said in the upgrade note.

“Pent-up demand to beach destinations continues, with near-international (i.e., Mexico/Caribbean) recovering following the sharp but short-lived drop-off when the U.S. implemented testing for international arrivals on Jan. 26,” the analyst wrote.

She added that JetBlue’s sequential gains in published fares in the first quarter of 2021 suggest “strong improvement” into the second quarter.

Syth noted the five earnings levers that the company needs to execute:

• JetBlue’s Northeast alliance with American Airlines Group Inc AAL.
• Containment of fixed costs and improved variable cost efficiency.
• Potential for “higher ancillary/ buy-up rates following recent changes to Fare Options and introduction of Paisly.”
• Potential from its co-branded credit card.
• The transatlantic growth opportunity.

 JBLU Price Action: Shares are up 4.49% to $21.29 Monday morning.

(Photo: JetBlue)