Shares of JetBlue Airways Corp. took a hit on Tuesday, after an analyst called for a sell-off and after the air carrier announced that its longtime CEO would retire for health reasons.
A look at JBLU stock,
However, the chart suggests that the downgrade may have had something to do with the sell-off, as shares initially rose on the CEO news.
JetBlue shares rose after the CEO succession announcement, then fell in the wake of BofA Securities' sell call.
FactSet, Market Watch
BofA Securities' Andrew DiDora lowered his rating on the stock to underperform, after remaining neutral for the past five months.
He cut his price target to $3 from $6, with the new target suggesting a decline of about 42% from current levels, making Didora the most bearish of the 14 analysts surveyed by FactSet who cover the stock.
The stock fell 10.6% in midday trading, putting it on track to experience its largest one-day decline since losing 11.4% on June 13, 2022.
The selling snapped a three-day winning streak in which the stock rose 16.8% amid the three-day winning streak. On Monday, the stock rose 3.2%, as JetBlue was protected from issues surrounding Boeing Co.
737 MAX 9 aircraft, noting that JetBlue’s fleet consists only of Airbus EADSY aircraft,
air,
Planes.
DiDora said he expects the “challenging domestic airline industry” — characterized by oversupply, inflation in costs and softening travel demand — will put pressure on growth and costs in 2024.
Additionally, he wrote that he believes issues surrounding manufacturing problems with some jet engines used by Pratt & Whitney will impact JetBlue's earnings. He sees “execution risk” as investors await a court ruling in the company's lawsuit with regulators over its deal to buy Spirit Airlines Inc. SAVE,
Separately, the company said late Monday that CEO Robert Hayes will retire from the airline on February 12 after nine years in the role.
“[T]“The unusual challenges and pressures of this job have taken their toll, and on the advice of my doctor and after speaking with my wife, it is time to focus more on my health and well-being,” Hayes said.
Joanna Geraghty, currently JetBlue's chief operating officer, has been named Hayes' successor.
Along with the CEO succession announcement, JetBlue said December demand remained “healthy” while operating performance during the busy holiday schedule remained “strong.”
Therefore, JetBlue said it expects fourth-quarter results to be at the “better end” of guidance ranges provided in early December, when it narrowed its loss forecast and said revenue would fall less than previously expected.
The stock is up 13.8% over the past three months, but down 29.5% over the past 12 months. In comparison, the US Global Jets ETF JETS is up 1.7% over the past year while the S&P 500 SPX is up 22.1%.
