Air Travel Demand and Lower Fuel Costs To Propel JetBlue's Turnaround: Analyst Upgrades Stock

BofA Securities analyst Andrew G. Didora upgraded JetBlue Airways Corp JBLU from Underperform to Neutral, setting a price target of $6 from $3.

Despite improving revenue trends, Didora acknowledged that JetBlue Airways’ balance sheet remains challenged. The re-rating reflects fundamentals and a favorable industry backdrop.

That said, contemplating JetBlue Airways’ August debt transaction, Didora forecasted a nearly $3.7 billion liquidity position in 2026, almost 90% above 2019 levels, which he noted provides the company time to execute its turnaround plan.

The price target is 6.0x Didora’s 2025E EBITDAR, in line with its long-term average. In his prior updates, the analyst returned to an EV/EBITDAR valuation methodology from EV/Sales as losses are decelerating from 2024-2026 at the net earnings level, driven by improving business fundamentals.

Didora noted that air travel demand, as measured by Transportation Security Administration (TSA) throughput, has been stable in recent weeks as domestic capacity continues to moderate, coinciding with falling fuel prices.

While the analyst noted these recent trends as an industry tailwind, he noted JetBlue Airways’ positioning is further supported by ongoing self-help measures, as demonstrated by last week’s positive investor update.

In last week’s investor update, JetBlue Airways spoke to improving revenue trends, especially in Latin America, which had posed headwinds earlier this year. The airline also benefits from ongoing revenue initiatives supported by the JetForward plan.

Didora forecasts fiscal third-quarter and fiscal 2024 unit revenues of +4.2% and +0.5% from his previous +0.9%and -1.2% and flow through the latest fuel curve. The analyst raised his third-quarter, fiscal 2024 and fiscal 2025 EPS estimates to $(0.17), $(0.65), $(0.26) from $(0.49), $(1.26) and $(0.94) previously.

Price Action: JBLU stock is up 8.77% at $5.77 at the last check on Monday.

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