Bulletin
Investor Alert

Dec. 16, 2020, 12:53 p.m. EST

United, JetBlue stocks get downgrades from JPMorgan

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    JetBlue Airways Corp. (JBLU)
  • X
    Spirit Airlines Inc. (SAVE)
  • X
    United Airlines Holdings Inc. (UAL)

or Cancel Already have a watchlist? Log In

By Claudia Assis

It was “housekeeping” day for JPMorgan analysts covering U.S. airlines, who on Wednesday downgraded their ratings on shares of JetBlue Airways Corp., United Airlines Holdings Inc., and Spirit Airlines Inc. to the equivalent of sell on valuation concerns.

“What began as a simple housekeeping response to disappointing but unsurprising (fourth-quarter) demand trends has, instead, become a recommendation for selective profit-taking,” the analysts said.

JetBlue /zigman2/quotes/207639051/composite JBLU -1.01% is likely to continue to control costs, but the downgrade reflects “a lack of expected upside” to the analysts’ price target of $14.

Lack of upside as compared with JPMorgan’s $25 price target also led to Spirit’s /zigman2/quotes/205782179/composite SAVE -1.26% downgrade. The company entered a “maturation phase” in 2018, with a new pilot contract and “disciplined” growth.

Related: Southwest Airlines to start filling middle seats, leaving Delta as last holdout

The pandemic, however, “has materially impacted the company’s profitability alongside the industry broadly. Overall, our underweight rating at Spirit reflects the lack of significant expected upside relative to our price target,” they said.

United /zigman2/quotes/205037281/composite UAL -2.94% , also downgraded on valuation, “can endure the current downturn with sufficient liquidity,” the JPMorgan analysts said, tacking on a price target of $44.

United has “turnaround momentum heading into the crisis and its inherent guidance conservatism, which has historically reduced risk of earnings misses,” the analysts said.

With the downgrades, JetBlue, Spirit and United join American Airlines Group Inc. /zigman2/quotes/209207041/composite AAL -3.72% and Southwest Airlines Co. /zigman2/quotes/201071949/composite LUV +1.50% as JPMorgan’s sell-rated airlines stocks. Alaska Air Group Inc. /zigman2/quotes/200972303/composite ALK +0.42% and Delta Air Lines Inc. /zigman2/quotes/200327741/composite DAL -1.60% remain rated the equivalent of buy, with implied upside around 30%, the analysts said.

Airlines have seen demand fall off a cliff with the pandemic, and U.S. carriers cut flights, scrapped aircraft ahead of schedule and received billions of dollars in bailout money to preserve jobs.

Several airlines have raised the alarm about fourth-quarter demand, with United late last week, saying it expects quarterly revenue to be down “close to 70%” year-on-year.

The airline said it continues to see “a significant impact in demand” for air travel, with a continued slowdown in future bookings as a result of the spike in COVID-19 and travel restrictions in the U.S. and in many other countries, despite vaccine optimism.

The U.S. Global Jets ETF /zigman2/quotes/207744796/composite JETS -0.35% has lost 29% this year, contrasting with gains around 14% for the S&P 500 index. /zigman2/quotes/210599714/realtime SPX +1.95%

/zigman2/quotes/207639051/composite
US : U.S.: Nasdaq
$ 18.63
-0.19 -1.01%
Volume: 13.59M
March 5, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$5.95 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/205782179/composite
US : U.S.: NYSE
$ 34.42
-0.44 -1.26%
Volume: 6.45M
March 5, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$3.41 billion
Rev. per Employee
$208,240
loading...
/zigman2/quotes/205037281/composite
US : U.S.: Nasdaq
$ 50.52
-1.53 -2.94%
Volume: 21.50M
March 5, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$16.58 billion
Rev. per Employee
$206,384
loading...
/zigman2/quotes/209207041/composite
US : U.S.: Nasdaq
$ 20.45
-0.79 -3.72%
Volume: 63.18M
March 5, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$13.59 billion
Rev. per Employee
$168,812
loading...
/zigman2/quotes/201071949/composite
US : U.S.: NYSE
$ 56.92
+0.84 +1.50%
Volume: 11.42M
March 5, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$33.13 billion
Rev. per Employee
$160,142
loading...
/zigman2/quotes/200972303/composite
US : U.S.: NYSE
$ 64.89
+0.27 +0.42%
Volume: 1.78M
March 5, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$8.03 billion
Rev. per Employee
$162,113
loading...
/zigman2/quotes/200327741/composite
US : U.S.: NYSE
$ 46.21
-0.75 -1.60%
Volume: 20.61M
March 5, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$29.97 billion
Rev. per Employee
$231,014
loading...
/zigman2/quotes/207744796/composite
US : U.S.: NYSE Arca
$ 25.71
-0.09 -0.35%
Volume: 10.59M
March 5, 2021 8:00p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,841.94
+73.47 +1.95%
Volume: 3.33B
March 5, 2021 5:44p
loading...

This Story has 0 Comments
Be the first to comment
More News In
Industries

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.