Shares of JetBlue Airways have experienced a noticeable uptrend as analysts from BofA Securities highlight the airline's robust performance amid improving industry fundamentals. The brokerage has upgraded JetBlue’s stock rating from 'underperform' to 'neutral' and has significantly increased its price target from previous estimates, now standing at $6, reflecting a strong conviction in the airline's growth potential.
During intraday trading on Monday, JetBlue’s stock climbed as much as 7.6%, a clear indication of investor confidence. According to BofA analysts Andrew Didora and Samuel Clough, air travel demand, as measured by the Transportation Security Administration (TSA) throughput, has stabilized in recent weeks.
This demand surge coincides with a moderation in domestic capacity, matched by a decrease in fuel prices, which has provided a favorable backdrop for JetBlue’s recovery efforts. Interestingly, the TSA throughput has surpassed domestic supply growth for the first time since March—an essential indicator that demand is outpacing supply, a key metric that often dictates pricing power and revenue growth within the airline industry. In a recent announcement, JetBlue adjusted its third-quarter fuel cost projections downwards while simultaneously lifting its revenue forecast.
This adjustment underscores the airline's improved performance in terms of bookings, especially in the Latin region compared to the same period last year. The airline now anticipates that its revenue for the September quarter could range from a decline of 2.5% to an increase of 1% year-over-year. This figure is a positive revision from JetBlue's earlier forecast, which predicted a decline between 1.5% and 5.5%.
BofA has reacted to these positive indicators by raising its revenue growth target for the third quarter to 4.2%, a sharp increase from a previously estimated 0.9%. Moreover, estimates regarding per-share losses have reflected a positive shift, improving from $0.49 down to $0.17, indicating a more optimistic outlook on profitability for JetBlue moving forward.
Current market expectations compiled by Capital IQ suggest that JetBlue's revenue is expected to hit approximately $2.31 billion, with an adjusted per-share loss of $0.34 for the quarter. Anticipating future quarters, analysts at BofA increased their revenue estimates for JetBlue for the year 2024 to $9.31 billion, up from $9.15 billion.
The forecast for adjusted per-share loss has also seen an improvement, now standing at $0.69 compared to the earlier estimate of $1.26. On the other hand, Capital IQ has a consensus projection of around $9.25 billion in revenue for the year, alongside a projected per-share loss of $0.98. In terms of capacity, domestic airlines are projected to experience a growth of 2% from September to November, a notable decline from the over 6% peak levels observed in May and June.
This moderation in capacity is anticipated to positively influence revenues, easing some of the pressures associated with pricing power that airlines have faced throughout the year. “Even though the industry has grappled with constrained pricing power, we are optimistic that stable demand will lead to enhanced revenue trajectories,” concluded Didora and Clough, further solidifying the optimistic sentiment surrounding JetBlue Airways. As of the latest updates, JetBlue’s stock price stands at $5.71, marking a change of +0.41 with a percent increase of +7.74..