In Morgan Stanley's eyes, JetBlue ( JBLU) may be the best growth story that the beleaguered airline industry has to offer -- it's just too expensive to buy at current levels. A 10-week rally has tacked close to $8 onto JetBlue shares, putting the company's price-to-earnings multiple at 28 times forward 12-month consensus earnings estimates, which is more than a 50% premium to the S&P 500, according to Morgan Stanley research. Because of valuation concerns given the historical valuation of low-cost rival Southwest Airlines ( LUV), analyst William Greene cut the company's rating to equal weight from overweight. "Over the past 25 years, Southwest has traded on average at a 20% premium to the S&P's forward multiple. With the S&P trading at 18 times forward consensus, a multiple of 22 for JetBlue would be more in line," said Greene. "Our JetBlue downgrade simply reflects a preference for a conservative approach to valuation. Translation: Investors in airlines should not get greedy." Indeed, investors heeded Greene's advice on Thursday, taking profits and pushing JetBlue shares down $1, or 2.8%, to $34.27. The downgrade puts a damper on the bullishness that emerged after JetBlue's first-ever shareholder meeting last Wednesday, in which the New York-based low-cost carrier told investors that the company will grow between 55% and 60% in 2003. Going forward, management said double-digit percentage growth will continue, with 30% to 40% growth in 2004 and plans to add 31 planes through the end of 2004. In an industry in which eye-popping losses are common and earnings multiples are rare, JetBlue's performance has attracted a stampede of investors and positive comments from analysts. But while Morgan Stanley believes JetBlue could be pricey, bulls tout JetBlue's huge growth rate as a reason why the company deserves to trade at a premium to every other airline.