Shares of air carrier JetBlue (JBLU) - Get JetBlue Airways Corporation Report glided higher on Monday after receiving an upgrade from Buckingham Research Group analyst Daniel McKenzie to buy from neutral, as well as a higher one-year price target.
Shares of JetBlue gained 1.8% to $16.66 in trading on the Nasdaq Stock Market after McKenzie raised his rating on the Long Island City-based company and lifted his 12-month price target to $22 from $18 on what he sees as an improved valuation snapshot following the company's $800 million stock buyback announcement in September.
"What's changed: Valuation; improved IT sophistication to drive better revenue; and greater-than-expected capital returns," McKenzie wrote in a note to clients. "At this point, competitive capacity looks manageable," which combined with the company's stock buybacks should help lift 2020 per-share earnings, McKenzie said.
Analysts polled by FactSet are currently expecting full-year 2019 per-share earnings of $1.90 and full-year 2020 per-share earnings of $2.32. For the third quarter, analysts are expecting earnings of 51 cents a share on revenue of $2.1 billion.
McKenzie's upgrade on JetBlue stands in contrast to his views on Delta Air Lines (DAL) - Get Delta Air Lines, Inc. Report , which the analyst downgraded to the equivalent of a hold from buy and slashed his price target from $74 to $58 amid what he sees are ongoing cost pressures related to a slowing economy - for Delta, and also for other U.S. airlines.
Delta last week lowered its third-quarter earnings guidance, citing higher costs, with its stock falling some 8% in response.
"With or without a recession, shares are likely to re-rate lower for longer on [fourth quarter] cost pressures annualizing into 2020," McKenzie wrote in a separate report to clients last week.
Delta shares were down 0.24% at $53.68. The Atlanta-based carrier reports its third-quarter Thursday. JetBlue, meantime, reports its third-quarter results on Oct. 24.