Citigroup Downgrades JetBlue; Raises Price Target (JBLU)

Citigroup is out with a research report this morning, where it downgrades shares of JetBlue Airways Corp.

to Hold/High Risk, from Buy/High Risk; it also raised its price target on the stock to $8.00, from $7.00. The Citi analysts said that the call was based purely on valuation. They noted that, while JBLU's competitive network, advantaged non-fuel costs, solid liquidity, and more conservative growth support improving earnings and cash flows, the stock's valuation appears fair versus peers'. They said, “With the stock at 6x 2011E EV/EBITDAR, EBITDAR margins plateauing around 20%, and growth plans limited to mid-single digit (which we commend), we find it difficult to assess a multiple in excess of a turn above the group's current 5x 2011E EV/EBITDAR. JBLU has previously traded at 7x+ but when margins were recovering or revenue growth was 20%+ YoY, which we are not projecting in 2011-13.”