Bob McAdoo: JetBlue Worth $30, Will Outperform The Market

In a report published Wednesday, Imperial Capital analyst Bob McAdoo maintained an Outperform rating on

, while raising the price target from $25 to $30, after the company reported record 2Q15 results. JetBlue Airways recorded revenues of $6.1bn, EBITDA of $1.2bn, and EPS of $1.34 in the 12 month period ended June 30. JetBlue reported 2Q15 PRASM growth of 1.4 percent y/y, while the US peers have all reported negative y/y PRASM performance. "While management did not provide full 3Q15 PRASM guidance, the company did indicate that July PRASM is trending up approximately 0.5% vs. July 2014. This positive guidance is in stark contrast to legacy peers that are guiding to lower PRASM on weaker foreign currencies, increased domestic competition and softer pricing trends," analyst Bob McAdoo commented. McAdoo expects JetBlue's domestic demand to improve as the company progresses through the "seasonally stronger summer months." Since investors are focusing on PRASM growth, rather than on margin expansion or ROIC, JetBlue's shares are likely to "perform well over the next several months," the Imperial Capital stated. JetBlue's profitability in the long term is expected to be driven by "new initiatives, including baggage fees, new fare options, and higher seat density." However, the company's shares are likely to be driven by "improving revenue trends that are outpacing the rest of the industry," McAdoo added.