Airline Shares' Descent Could Mean Bargains

Analysts who are more bearish on JetBlue issued similar, if slightly less optimistic, comments. Bear Stearns analyst David Strine told investors that JetBlue trades at 26 times his 2005 earnings estimate and would attractive below 25 times 2005 earnings, which is the high end of Southwest's earnings multiple. Morgan Stanley's Greene also said JetBlue would appear more attractive at 25 times 2005 earnings, but both cautioned that JetBlue was still slightly overvalued.

"For airlines, we prefer to pay a P/E multiple less than the long-term growth rate," said Greene. "We're not quite there on 2005 EPS, but investors with a high risk tolerance may want to consider building a position if JetBlue sells off significantly on Friday."

And if other low-cost carriers take significant stumbles over the next few weeks, J.P. Morgan analyst Jamie Baker said those names could be worth looking at as well -- although he admits that shares are still a bit pricey.

"While consistent with our overall preference for the aged and infirmed," said Baker, "a further, more pronounced correction in low-cost carrier shares may cause us to warm to that sector sooner than originally planned, but we're not there yet."