Deutsche Bank Upgrades JetBlue Airways (JBLU) to Buy

January 30, 2014 8:14 AM EST Send to a Friend
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Price: $15.37 --0%

Rating Summary:
    9 Buy, 10 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 14 | Down: 28 | New: 51
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Deutsche Bank upgraded JetBlue Airways (NASDAQ: JBLU) from Hold to Buy with a price target of $13.00 (from $9.00). Analyst Michael Linenberg pointed out value in its LiveTV subsidiary.

"We are raising our rating on JetBlue to Buy from Hold to reflect our improved earnings outlook, attractive share price valuation, and our belief that the company's ROIC will exceed its WACC in 2014 for the first time in a decade. Furthermore, we expect to see the earnings momentum story of the past two years extend into 2014 and 2015 resulting in a projected 30% EPS CAGR over the 2012 - 2015 timeframe. Lastly, we see the potential for the company to unlock meaningful value via its wholly-owned LiveTV subsidiary which provides in-flight connectivity systems and services," said Linenberg.

"We estimate that JetBlue’s wholly-owned LiveTV subsidiary generates close to $100 million of annual sales. That is not too far off from other providers of inflight connectivity systems and services such as Global Eagle Entertainment (Nasdaq: ENT) and Gogo (Nasdaq: GOGO) who produce about $250 - $350 million in annual sales (but growing very quickly)," he added. "If one were to carve-out a conservative valuation for LiveTV, the under-performance of JetBlue's share price over the past two years, in our view, would be profound. We think LiveTV is not only a significant hidden asset, but if partially monetized via a public or private offering, could meaningfully enhance the company’s ROIC via use of the proceeds to repurchase shares and/or pay down debt."

For an analyst ratings summary and ratings history on JetBlue Airways click here. For more ratings news on JetBlue Airways click here.

Shares of JetBlue Airways closed at $8.50 yesterday.


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