Everything but the kitchen sink has been thrown at JetBlue Airways (NASDAQ:JBLU) in 2023. Yet, JetBlue stock shouldn’t stay grounded for too long, as the situation isn’t as dire as the perma-bears think it is. All in all, I am bullish on JBLU stock as an audacious investment for risk-tolerant traders.
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JetBlue Airways is a well-known airline carrier that travels to multiple continents. The company actually has a pretty good recent track record of EPS beats and even managed to post a profit in this year’s second quarter.
However, JetBlue and other airlines have faced difficulties that could not have been anticipated and which could create ongoing issues. On the other hand, the market seems to have acknowledged JetBlue’s obstacles and priced them into the stock already. Hence, there should come a time in the near future when JBLU stock recovers and, hopefully, the world returns to a more peaceful state.
JetBlue Airways: More Problems Than You Can Shake a Stick At
JetBlue and other airlines have had so many problems that it’s hard to even list them all. However, Citigroup (NYSE:C) analysts did a pretty good job of citing JetBlue’s issues in 2023.
Specifically, the Citigroup analysts stated that the resilience of U.S. discount airline demand, higher interest rates, broader uncertainty on the U.S. economic outlook, continued oil price volatility, and aerospace supply chain issues “seem to create a challenging scenario” for JetBlue and some of the company’s peers. I’d say that these issues don’t just “seem to” create problems – they definitely pose obstacles for JetBlue and other carriers to overcome.
To all of that, we could add JetBlue’s challenges pertaining to its plans to acquire Spirit Airlines (NYSE:SAVE). This could pay off in the long run, but such an acquisition will undoubtedly be costly in the immediate term.
In case that’s not enough, JetBlue also recently announced its pessimistic guidance for the company’s third-quarter bookings and lowered its revenue expectations. Plus, as you are surely aware by now, geopolitical conflict in the Middle East has forced airlines to cancel certain flights and has had an inflationary impact on fuel costs. Given all of these issues, could the situation be any worse for JetBlue and its stakeholders?
After the Kitchen Sink Comes a (Possible) Relief Rally
If I could compare JetBlue to another company now, it would be Advance Auto Parts (NYSE:AAP). The market has thrown not only the kitchen sink but the entire kitchen at Advance Auto Parts. Everything that could possibly go wrong already has. That’s why there’s so much pessimism surrounding AAP stock now.
The same thing could be said about JetBlue and about JBLU stock. Remember, there can’t be a rainbow unless it rains first. Besides, it’s not as if the market is unaware of the problems that the Citigroup analysts cited. All of these issues, along with JetBlue’s gloomy revenue forecast, have undoubtedly been factored into the share price by now.
In fact, the pessimism surrounding JetBlue is so entrenched that after JetBlue announced its downbeat revenue outlook, JBLU stock actually went up. It seems that JetBlue’s guidance, as dreary as it was, wasn’t as bad as investors had already assumed it would be.
That’s what I would call “sellers’ exhaustion.” JetBlue stock is so beaten down that the short-sellers can’t even push the stock down after a negative news report. At this point, I suggest that it would only take one piece of positive news – conflict resolution in the Middle East, for example – to send the short-sellers running for the exits.
Is JBLU Stock a Buy, According to Analysts?
On TipRanks, JBLU comes in as a Hold based on one Buy, five Holds, and one Sell rating assigned by analysts in the past three months. The average JetBlue Airways stock price target is $6.04, implying 31.2% upside potential.
Conclusion: Should You Consider JBLU Stock?
It’s easy to find excuses to sell JetBlue Airways stock now. What’s not so easy is seeing the bottoming process when it’s happening and pouncing on the opportunity before it disappears.
My greatest hope, of course, is that there is peace in the world, which would also have the secondary effect of reducing fuel costs and allowing JetBlue Airways to conduct its business throughout the Middle East. So, if you don’t mind accepting some risk and volatility in the near term, I invite you to hop on board and consider JBLU stock.
