It was “housekeeping” day for JPMorgan analysts covering U.S. airlines, who on Wednesday downgraded their ratings on shares of JetBlue Airways Corp., United Airlines Holdings Inc., and Spirit Airlines Inc. to the equivalent of sell on valuation concerns.
“What began as a simple housekeeping response to disappointing but unsurprising (fourth-quarter) demand trends has, instead, become a recommendation for selective profit-taking,” the analysts said.
JetBlue
JBLU,
Lack of upside as compared with JPMorgan’s $25 price target also led to Spirit’s
SAVE,
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The pandemic, however, “has materially impacted the company’s profitability alongside the industry broadly. Overall, our underweight rating at Spirit reflects the lack of significant expected upside relative to our price target,” they said.
United
UAL,
United has “turnaround momentum heading into the crisis and its inherent guidance conservatism, which has historically reduced risk of earnings misses,” the analysts said.
With the downgrades, JetBlue, Spirit and United join American Airlines Group Inc.
AAL,
Airlines have seen demand fall off a cliff with the pandemic, and U.S. carriers cut flights, scrapped aircraft ahead of schedule and received billions of dollars in bailout money to preserve jobs.
Several airlines have raised the alarm about fourth-quarter demand, with United late last week, saying it expects quarterly revenue to be down “close to 70%” year-on-year.
The airline said it continues to see “a significant impact in demand” for air travel, with a continued slowdown in future bookings as a result of the spike in COVID-19 and travel restrictions in the U.S. and in many other countries, despite vaccine optimism.
The U.S. Global Jets ETF
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