BofA's Mixed Airline Ratings: Upbeat On United's Growth, Cautious On JetBlue's Challenges, Bullish On Delta's Cash Flow
Portfolio Pulse from Nabaparna Bhattacharya
BofA Securities analyst Andrew G. Didora provided mixed ratings for airlines, downgrading JetBlue (JBLU) to Underperform with a price target of $3, citing industry challenges and engine issues. The outcome of JetBlue's lawsuit regarding the acquisition of Spirit Airlines (SAVE) also poses execution risk. United Airlines (UAL) was upgraded to Buy with a price target of $56, due to strong balance sheet and revenue growth prospects. Delta Air Lines (DAL) maintained a Buy rating with a $50 price target, expected to generate significant free cash flow in 2024. Airline stocks underperformed last year, and the domestic market is projected to be oversupplied in 2024.
January 09, 2024 | 8:18 pm
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NEGATIVE IMPACT
JetBlue downgraded to Underperform with a price target of $3 by BofA, facing industry challenges and engine issues, with additional risk from a lawsuit regarding Spirit Airlines acquisition.
The downgrade reflects significant challenges and potential growth pressures, which are likely to negatively impact investor sentiment and the stock price in the short term.
CONFIDENCE 80
IMPORTANCE 85
RELEVANCE 90
NEUTRAL IMPACT
Spirit Airlines is involved in a lawsuit with JetBlue, which poses execution risk for JetBlue's acquisition plans. The outcome of this lawsuit is pending and could impact Spirit's stock.
While the lawsuit is a risk factor, the direct short-term impact on Spirit's stock is uncertain until a ruling is made.
CONFIDENCE 70
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
Delta Air Lines maintains a Buy rating with a $50 price target from BofA, expected to generate substantial free cash flow in 2024, distinguishing it among major airlines.
The positive free cash flow forecast for 2024 supports a bullish outlook, likely contributing to upward momentum in Delta's stock price.
CONFIDENCE 80
IMPORTANCE 80
RELEVANCE 80
POSITIVE IMPACT
United Airlines upgraded to Buy with a price target of $56 by BofA, based on strong balance sheet, favorable valuation, and steady demand, with expected revenue growth outpacing peers.
The upgrade and positive outlook suggest investor confidence and potential for stock price appreciation in the short term.
CONFIDENCE 80
IMPORTANCE 85
RELEVANCE 90