Air Travel Demand, Lower Fuel Costs Drive JetBlue’s Recovery: Analysts Upgrade Shares – JetBlue Airways (NASDAQ:JBLU)

BofA Securities analyst Andrew G. Didora raised his rating JetBlue Airways Corp JBLU from “underperform” to “neutral”, setting a price target of $6 versus $3.

Despite improving revenue trends, Didora acknowledged that JetBlue Airways’ balance sheet remains a challenge. The reassessment reflects fundamentals and a favorable industry backdrop.

With JetBlue Airways’ August debt deal in mind, Didora projects 2026 liquidity of nearly $3.7 billion, up nearly 90% from 2019, which he noted gives the company time to execute its turnaround plan.

The price target is 6.0x Didor’s 2025E EBITDAR, in line with its long-term average. In his previous updates, the analyst reverted to the EV/EBITDAR valuation methodology from EV/Sales, as losses are decreasing in 2024-2026 at the net income level, which is due to improving business fundamentals.

Didora noted that air travel demand, as measured by Transportation Security Administration (TSA) capacity data, has remained stable in recent weeks, with domestic capacity continuing to decline, coinciding with falling fuel prices.

The analyst noted that recent trends are a positive factor for the industry. At the same time, he noted that JetBlue Airways’ position is further supported by self-help efforts, as evidenced by last week’s positive investor update.

In last week’s investor update, JetBlue Airways spoke of improving revenue trends, particularly in Latin America, which had been a headwind earlier this year. The airline is also benefiting from ongoing revenue initiatives supported by the JetForward plan.

Didora is forecasting fiscal third-quarter and fiscal 2024 unit revenue of +4.2% and +0.5%, from the previous +0.9% and -1.2%, and flowing 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 shares were up 8.77% to $5.77 as of last check on Monday.

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