Shares of JetBlue Airways Corp. (NAS:JBLU) rallied 2.0% in premarket trading Monday, after analyst Jamie Baker at J.P. Morgan turned bullish on the air carrier, citing a more upbeat earnings outlook despite a downbeat Street view. Baker raised his rating to overweight from neutral, and lifted his stock price target to $24 from $23. He expects 2020 earnings per share of $2.67, within JetBlue's guidance range of $2.50 to $3.00 while the FactSet EPS consensus is below the range at $2.40, citing the upbeat metrics of 2.3% growth in total revenue per available seat mile and the 0.7% decline in costs per available seat mile, excluding fuel. "Of the aforementioned drivers, we have the most confidence in the ex-fuel CASM outcome, which is a sharp reversal from how we've viewed the company over the years," Baker wrote in a note to clients. "And [JetBlue] is far from an analyst favorite, as evidenced by the highest [percent] of 'sells' in our universe (and the second-fewest 'buys' after [Spirit Airlines Inc.])." Separately, Baker downgraded Alaska Air Group Inc. (NYS:ALK) to neutral from overweight, citing valuation concerns. Alaska Air's stock slumped 2.5% ahead of the open. JetBlue shares have rallied 16.8% year to date through Friday and Alaska Air's stock has climbed 17.6%, while the NYSE Arca Airline Index (1083:XX:XAL) has hiked up 18.0% and the S&P 500 (S&P:SPX) has gained 20.6%.
Oct. 28, 2019, 8:36 a.m. EDT