Melius Reiterates Hold Rating on JetBlue Airways (JBLU)
Melius analyst Conor Cunningham reiterated a Hold rating and $7.00 price target on JetBlue Airways (NASDAQ: JBLU)
The analyst comments "The concern we've had with JetBlue is that as they rework the network to center more around an East Coast leisure network, they run into concentration risk. Although the plan to cull underperforming routes and concentrate where JetBlue does best makes strategic sense, the issue is the incremental passenger needed to fill that new network needs to come from another airline. It is no secret that JetBlue has ceded share to Delta in Boston over the years, as Delta took the pandemic as an opportunity to focus on coastal gateways. Delta is now a very real competitor in the market with high-end products, loyalty and the network behind it. JetBlue has looked to other markets in the Northeast (Islip NY, Manchester NH, etc.), but Delta has also made it known it wants to continue to beef up Boston which puts further pressure on JetBlue. The result is JetBlue seeing 3 pts of competitive capacity pressure vs. minimal growth for others. This leads to a disappointing unit revenue outlook even when you ignore Easter (1.5 pts slip to 2Q). Recall, many within the U.S. airline industry have cited 2-3 pts of sequential improvement in unit revenue trends, while JetBlue's 1Q outlook today calls for a decline."
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Shares of JetBlue Airways closed at $8.09 yesterday.