Cowen: JetBlue Can Overcome April Revenue 'Blues'

JetBlue Airways Corporation JBLU guided to a 12.5 percent decline in its April unit revenue, significantly below expectations.

Cowen’s Helane Becker upgraded the rating on the company from Market Perform to Outperform, with a price target of $24.

Reasons To Buy JetBlue

Becker believes that there are several reasons to own JetBlue Airways’ stock, including the expectations that April would potentially be the “low point for unit revenue for 2016.”

Related Link: JetBlue Q1 Earnings Conference Call

The analyst expects slower capacity growth in 2H16 to drive better unit revenue for the company, while an improving balance sheet was expected to drive a change in capital use.

“JetBlue shares reacted negatively to the company's April / 2Q16 unit revenue guidance, although if May and June volumes improve more than expected, there could be a positive surprise ahead,” Becker stated.

Outlook

The analyst expects the company to continue to post robust results, due to low jet fuel prices, partially offset by the lower unit revenue.

JetBlue Airways is also expected to benefit from its new credit card agreement, as well as its “seat densification” initiative.

“We believe there is potential for capital return as the company finishes their balance sheet improvement,” the analyst pointed out.