JBLU - JetBlue falls after Evercore ISI downgrades due to risk a Spirit acquisition drags on results

2023-07-11 07:40:12 ET

Evercore ISI lowered its rating on JetBlue Airways Corporation ( NASDAQ: JBLU ) on Monday to Underweight from a prior rating of In-Line.

Analyst Duane Pfennigwerth said that while there will be twists and turns along the way, the firm thinks the Spirit Airlines ( SAVE ) acquisition ultimately gets done and the premium JBLU is paying for Spirit continues to expand. Pfennigwerth also noted that the JBLU balance sheet is on a journey from "average to worst" based on 2X to 5X Net Debt to EBITDA pro-forma in comparison to the low-cost mean of 1.2X. He also warned that integration is complex, while the company’s execution track record as a standalone is mixed. In addition, he noted there are Northeast Alliance wind-down scenarios that could be highly disruptive to JetBlue’s second-half capacity planning and cost execution.

JetBlue is expected to post its Q2 earnings report before the end of July. 8 of the last 9 EPS revisions from analysts have been to the upward side. The current consensus expectations are for the airline company to report revenue of $2.60B and EPS of $0.41.

Shares of JetBlue ( JBLU ) were down 2.59% in premarket trading to $9.04 vs. the 52-week trading range of $6.18 to $9.45.

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