It has been a rough couple of years for JetBlue Airways (NASDAQ:JBLU). It was forced by a court ruling to end its Northeast Alliance (NEA) with American Airlines, then sued by the Justice Department to block a merger with Spirit, all the while facing ongoing industry challenges in the wake of a global pandemic. All these sources of turbulence have culminated in lackluster Q1 results and disappointing guidance for the remainder of 2024. So, what should one make of JetBlue’s stock after this bumpy ride?
Unsurprisingly, the stock has declined by over 70% in the past three years. Though a new management team is taking steps to refocus the airline and return it to profitability, investors would do well to wait for signs of progress on those efforts before establishing a position.
About JetBlue Airways
JetBlue Airways is a low-cost airline with hubs in Boston and New York’s JFK, and transports over 30 million customers annually. It has established itself as a significant player in the aviation industry, providing reliable and cost-effective services to over 100 destinations in the United States, Canada, the Caribbean, Latin America, Europe and the United Kingdom.
Like the rest of the airline industry, JetBlue continues to struggle to recover from the impacts of COVID-19. Business travel activity has yet to fully return to pre-pandemic levels, and personal travel has been mainly focused on common vacation destinations, leaving airlines competing for the same heavily traveled routes. However, the market is projected to recover and grow at an estimated CAGR of 4.46% through 2030.
JetBlue’s Recent Financial Results
The company recently announced its financial results for Q1 2024. Reported revenue aligned with the consensus expectations, coming in at $2.2 billion. There was an adjusted net loss of $145 million or -$0.43 per share, though this was better than the consensus prediction of a -$0.52 loss per share.
The company ended the quarter with $1.7 billion in unrestricted cash, cash equivalents, short-term investments, and long-term marketable securities on the balance sheet. Management has given guidance that they do not expect to approach a breakeven adjusted operating margin in 2024.
What is the Price Target for JBLU Stock?
The stock has dropped following the announcement of the company’s Q1 results. It currently sits in the lower half of the 52-week price range of $3.42-$9.45 and demonstrates negative price momentum, trading below the 20-day ($6.94) and 50-day ($6.67). The slide in price has dropped the stock into relative value territory, with a P/S ratio of 0.2x, comparing favorably to the Airline industry average of 0.49x.
Analysts following the company have taken a cautious stance on the stock. For example, TD Cowen analyst Helane Becker responded to recent earnings by lowering the price target on the shares from $7 to $6, though she maintained a Hold rating.
JetBlue is rated a Hold based on the recommendations and 12-month price targets assigned by ten Wall Street analysts over the past three months. The average price target for JBLU stock is $6.06, which represents a 2.71% upside from current levels.
Bottom Line on JetBlue
The new management team at JetBlue has their work cut out for them. Early steps taken look positive, though there may be more pain in the short term for shareholders. The stock is trading at value, but at this point, investors may want to hold off and look for a window of opportunity later in the year to see if the skies have cleared and signs of progress are on the horizon.
