Zika Fears Appear Fully Priced Into JetBlue Shares

While JetBlue Airways Corporation JBLU faces exciting growth opportunities, its shares already reflect Zika fears, Imperial Capital’s Michael Derchin said in a report. He initiated coverage of the company with an Outperform and a price target of $21.

JetBlue’s shares have lost about 33 percent over the past twelve months, mainly on account of concerns surrounding the potential impact of economic weakness and the Zika virus on travel to Puerto Rico, which is among the company’s core markets. Shares have also been under pressure due to intensifying competition in Boston and other key markets, analyst Derchin mentioned.

Concerns Overrated

Following this sell-off, JetBlue’s shares are now fully pricing in Zika fears. Moreover, Derchin believes that the company can “hold its own in competitive battles.” JetBlue has expanded its popular Mint product to more long-haul markets. This, along with brand loyalty and a differentiated product strengthen the company’s competitive position.

“While the impact of Zika on bookings is unknown, we expect some passengers to rebook flights to other destinations on JBLU rather than cancel vacation plans entirely, as most leisure travelers purchase tickets well in advance,” the analyst wrote.

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