Imperial Capital Starts JetBlue Airways (JBLU) at Outperform
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Imperial Capital initiates coverage on JetBlue Airways (NASDAQ: JBLU) with a Outperform rating and a price target of $21.00, suggesting ~20% upside.
Analyst Michael Derchin commented, "JBLU's stock has lost about a third of its value over the past twelve months, reflecting concerns regarding the potential impact of economic weakness and the Zika virus on travel to Puerto Rico, a core market, and increasing competition in Boston and other key markets, in our view. With the stock trading at 3.7x estimated 2016 TEV/EBITDAR, we believe that Zika concerns are fully priced into the shares, and JBLU can hold its own in competitive battles. JBLU is well positioned competitively, in our view, with the expansion of its popular Mint product to more long-haul markets, including Boston, brand loyalty, and differentiated product. JBLU has been increasing the size of its transcontinental Mint service which now represents roughly one-third of its capacity, up from 20% prior to Mint’s introduction. Florida, a long time core operation, represents about one-third of its capacity, with Fort Lauderdale a strong focus city. JBLU has been downsizing its Caribbean and Latin America capacity, which is now roughly one third of its system, particularly to Puerto Rico and Columbia. While the impact of Zika on bookings is unknown, we expect some passengers to rebook flights to other destinations on JBLU rather than cancel vacation plans entirely, as most leisure travelers purchase tickets well in advance."
Shares of JetBlue Airways closed at $17.53 yesterday.
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