Citi has updated the firm's stance on JetBlue Airways (NASDAQ: NASDAQ:JBLU), increasing the price target to $7.75 from the previous $6.00 while maintaining a Neutral rating on the stock.
The adjustment comes as JetBlue faces significant strategic decisions following recent developments.
The airline, which has been deemed Neutral/High Risk by the analyst, is at a pivotal juncture after the Northeast Alliance and plans to acquire Spirit Airlines (NYSE:SAVE) have both been set aside. This leaves JetBlue with a challenging path ahead as it seeks to regain growth and profitability in a post-pandemic market.
Despite some positive movements in unit revenue improvement, the analyst predicts that JetBlue's operational profitability will likely stay below the levels seen before the pandemic for an extended period. The revised price target of $7.75 per share is based on a roughly 7.15 times target multiple applied to the estimated 2025 EBITDA.
In other recent news, JetBlue Airways has experienced significant developments. Susquehanna raised its price target for the airline to $7, citing improved financial forecasts for the latter half of 2024 and the full year of 2025. The firm also adjusted its outlook for JetBlue's adjusted earnings per share (EPS) for the second half of 2024 and the full year 2025.
In addition, JetBlue has announced plans to open its first airport lounges at JFK and Boston Logan International Airport in late 2025. The company has also introduced a premium tier credit card and welcomed Sean Menke, a veteran of the airline industry, to its board of directors.
TD (TSX:TD) Cowen maintained its Hold rating for JetBlue, while BofA Securities upgraded the company's rating from Underperform to Neutral. Citi has also increased its price target for JetBlue, maintaining a Neutral rating.
Lastly, there have been notable labor union actions across various industries in the United States, including negotiations and strikes at major companies. However, the direct impact on JetBlue is not specified.
InvestingPro Insights
Recent InvestingPro data provides additional context to Citi's analysis of JetBlue Airways (NASDAQ:JBLU). The company's market capitalization stands at $2.62 billion, with a price-to-book ratio of 0.97, suggesting the stock is trading close to its book value. This aligns with the analyst's cautious stance and the Neutral rating.
JetBlue's financial challenges are evident in its negative operating income of $262 million for the last twelve months as of Q2 2023, supporting the analyst's prediction of below pre-pandemic profitability levels. The revenue decline of 6.04% over the same period further underscores the company's struggles in the current market environment.
InvestingPro Tips highlight that JetBlue "operates with a significant debt burden" and "may have trouble making interest payments on debt," which corroborates the analyst's concerns about the company's financial leverage. Additionally, the tip noting that "analysts do not anticipate the company will be profitable this year" aligns with Citi's outlook on JetBlue's operational profitability.
For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips for JetBlue Airways, providing a deeper understanding of the company's financial position and market performance.
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