JPMorgan Downgrades Airlines JetBlue, Spirit, United, Recommends 'Selective Profit-Taking'

Airline stocks have been flying high since the March market bottom, but one Wall Street analyst said Wednesday that a few of them have flown too high too fast.

The Analyst: JPMorgan analyst Jamie Baker double-downgraded the following three airline stocks:

  • JetBlue Airways Corporation JBLU from Overweight to Underweight, price target cut from $16 to $14.
  • Spirit Airlines Incorporated SAVE from Overweight to Underweight, price target reiterated at $25.
  • United Airlines Holdings Inc UAL from Overweight to Underweight, price target cut from $47 to $44.

Related Link: Airline Stock Short Sellers Deboard Ahead Of Coronavirus Vaccine Approval

The Thesis: In the downgrade note, Baker said his bearish take on the three airline stocks has mostly to do with their valuations after strong rallies in the last six months.

“What began as a simple housekeeping response to disappointing but unsurprising 4Q demand trends has, instead, become a recommendation for selective profit-taking,” the analyst said.

The airline rally has pushed a handful of airline stocks above the firm’s 2021 price targets, which were based on 2022 financial projections, he said. 

Investors should understand that the Underweight ratings are not akin to a hard sell call, Baker said.

Instead, he said near-term upside for the three downgraded stocks is no greater than 7%, suggesting they could underperform both their peer group and the broader market in coming months.

The analyst said investors who have been along for the ride in these stocks should consider locking in profits, but he is not recommending a short position in airline stocks.

Despite the downgrades, Baker said he remains bullish on airline stocks Alaska Air Group, Inc. ALK and Delta Air Lines, Inc. DAL.

Benzinga’s Take: The one-two punch of FDA-approved coronavirus vaccines and another round of large-scale government stimulus in the next couple of months could go a long way in restoring investor confidence in airline stocks.

Yet it may take the industry a long time to fully recover, and investors will need to determine just how much of that recovery is already priced into airline stocks after the recent rally.

Posted In: Jamie BakerJPMorganAnalyst ColorDowngradesPrice TargetTravelAnalyst RatingsGeneral

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.