JetBlue Airways (JBLU) Stock Falling as Airline Sector Tumbles

NEW YORK (TheStreet) -- Shares of JetBlue Airways Corp. (JBLU) are down by 6.25% to $19.21 in early afternoon trading on Monday, as the airline sector takes a hit following comments made by American Airlines (AAL) CEO Doug Parker at the International Air Transportation's annual general meeting in Miami, and some ratings downgrades.

Parker told Reuters that he is concerned about growing airline capacity depressing profits.

"The real question is, is this a one-time catch up for fuel prices being lower or is this airlines behaving like airlines used to and just increasing capacity because times are good," Parker said when asked about investor concerns regarding capacity increases exceeding a growth in demand.

Additionally, a few of JetBlue's rivals received ratings downgrades at Raymond James this morning.

American Airlines was lowered to "market perform" from "outperform." Both Delta Air Lines (DAL) and United (UAL), were reduced to "outperform" from "strong buy."

"While we believe that the U.S. airline industry is maintaining capacity discipline, we now expect the recovery in pricing heading into the seasonally stronger summer months to be somewhat muted vs. previous expectations due to the softer than expected U.S. economic growth and American's aggressive pricing response to Southwest's capacity growth impacting markets beyond Dallas," Raymond James said in an analyst note, MarketWatch reports.

Separately, TheStreet Ratings team rates JETBLUE AIRWAYS CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate JETBLUE AIRWAYS CORP (JBLU) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • JBLU's revenue growth has slightly outpaced the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 12.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 3900.00% and other important driving factors, this stock has surged by 98.44% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, JBLU should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • JETBLUE AIRWAYS CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, JETBLUE AIRWAYS CORP increased its bottom line by earning $1.19 versus $0.51 in the prior year. This year, the market expects an improvement in earnings ($1.75 versus $1.19).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Airlines industry. The net income increased by 3325.0% when compared to the same quarter one year prior, rising from $4.00 million to $137.00 million.
  • You can view the full analysis from the report here: JBLU Ratings Report