UPDATE: Raymond James Downgrades JetBlue Airways Corporation to Underperform as Thesis Has Played Out

In a report published Monday, Raymond James analyst James D. Parker downgraded the rating on

from Market Perform to Underperform. In the report, Raymond James noted, “JBLU is up 45% since mid-August and up 25% month to date compared to the airline index which is up 28% and 4% over the same periods, respectively. Our thesis that JetBlue would benefit from either outcome of the antitrust lawsuit against the merger of American and US Airways has played out, as it stands to gain from the requirement in the settlement to divest slots at slot-constrained Reagan National (DCA) and LaGuardia (LGA) airports. However, while we expect favorable impacts to JetBlue's earnings from the 1) acquisition of slots, 2) introduction of Wi-Fi, 3) rollout of a premium product, and 4) upgauging of its fleet, the recent strength in the stock appears to be overstating the benefits. JBLU is trading at 14.7x our 2014E EPS of $0.62 (and 13.0x our new 2015E EPS of $0.70). While this is below the 16.1x average 2014E P/E of domestic low cost carriers, we believe a larger discount is justified as its ROIC is only expected to reach 6% at YE15 (up from the TTM 4%) compared to the TTM ROIC of 7% at Southwest, 11% at Spirit, and 15% at Allegiant. Thus, we are downgrading JBLU to Underperform.” JetBlue Airways Corporation closed on Friday at $9.09.