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Shares of JetBlue Airways Corp. took a hard hit Tuesday, following an analyst’s call to sell the stock, and after the air carrier announced that its long-time chief executive was retiring for health reasons.
A look at the stock’s
JBLU,
chart suggests, however, that the downgrade may have had more to do with the selloff, as shares initially gained on the CEO news.
JetBlue’s stock ticked up after CEO-succession announcement, then dived in the wake of BofA Securities’ call to sell.
FactSet, MarketWatch
BofA Securities’ Andrew Didora cut his rating on the stock to underperform, after being at neutral for the past five months.
He slashed his price target to $3 from $6, with the new target implying about 42% downside from current levels, making Didora the most bearish of the 14 analysts surveyed by FactSet who cover the stock.
The stock tumbled 10.6% in midday trading, which puts it on track to suffer the biggest one-day drop since it shed 11.4% on June 13, 2022.
The selloff snaps a three-day win streak in which it ran up 16.8% amid a three-day win streak. On Monday, the stock rose 3.2%, as JetBlue was shielded from the issues surrounding Boeing Co.’s
BA,
737 Max 9 planes, given that JetBlue’s fleet consists only of Airbus
EADSY,
AIR,
aircraft.
Didora said he expects the “tough domestic airline industry” — characterized by increasing domestic supply, cost inflation and easing travel demand — will pressure growth and costs in 2024.
In addition, he wrote that he believes issues surrounding the manufacturing problems with some of the Pratt & Whitney jet engines it uses will weigh on JetBlue’s earnings. And he sees “execution risk” as investors wait for a court ruling in the company’s lawsuit with regulators regarding its deal to buy Spirit Airlines Inc.
SAVE,
Separately, the company said late Monday that Chief Executive Robert Hayes will retire from the airline on Feb. 12 after nine years in the role.
“[T]he extraordinary challenges and pressure of this job have taken their toll, and on the advice of my doctor and after talking to my wife, it’s time I put more focus on my health and well-being,” Hayes said.
Joanna Geraghty, currently JetBlue’s chief operating officer, was named Hayes’ successor.
Along with the CEO succession announcement, JetBlue said demand in December remained “healthy” while operational performance during the busy holiday schedule remained “strong.”
Therefore, JetBlue said it expects fourth-quarter results to be at the “better end” of the guidance ranges provided in early December, when it narrowed its loss expectations and said revenue would decline less than previously forecast.
The stock has rallied 13.8% over the past three months, but has plunged 29.5% over the past 12 months. In comparison, the U.S. Global Jets ETF
JETS
has gained 1.7% over the past year while the S&P 500 index
SPX
has rallied 22.1%.
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