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Vertex Pharmaceuticals Incorporated Message Board

ajitmd2000 5 posts  |  Last Activity: Dec 23, 2014 5:59 PM Member since: Dec 29, 2003
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  • Reply to


    by hawkeyes55555 Nov 28, 2014 8:26 AM
    ajitmd2000 ajitmd2000 Nov 28, 2014 8:22 PM Flag

    I bought a new position today because of potential upside due fall in oil prices. The price of oil has fallen more than 30% this year. Since the airlines have pricing power due to reduced competition, a lot of the savings will go to bottom line. Most of these savings have not been priced in. Furthermore, the price oil will continue to fall like it did in 1980s. I think $40-60/b range is possible. Fuel is 30% of operating costs, so there are huge operating leverages. I suspect the new CEO will nickel and dime the passengers to boost profits.

    The oil industry and Wall Street believe the fall in oil prices is temporary. I don't think so. Exploration, drilling, production tech has improved significantly. Huge reserves have been found worldwide. Plus shale. Look at the price of natural gas. Used to be $15/MBTU, now around $3-4/MBTU.

    I think that $20/s for JBLU is possible.

  • Reply to

    JBLU is going to 20+ range

    by listen_jockers Nov 26, 2014 11:10 AM
    ajitmd2000 ajitmd2000 Dec 5, 2014 6:48 PM Flag

    Besides the falling price of jet fuel, what JBLU got in its favor are:
    1. Using seats that have thinner cushion and frame, the company plants to add 15 seats per A320/321 or increasing capacity by 15% while saving 1,000 lbs weight Big increase in revenue with minimal incremental cost. Seat pitch at 33" is still greater that just about every airline.
    2. The company will delay taking delivery of the A320/321 neo due to the increase in seats. Big savings in capex.
    3. The company will offer tiered pricing with options for luggage choices, etc. Passengers can still get free first bag if they choose the pricier ticket. Then the company is offering Mint seats that are like business class.
    4. In this Q only 25% of the fuel has been hedged. Fuel makes up for 37% of the expenses. I do not think the big drop in jet fuel is priced in. There is a lot skepticism that crude oil price will quickly recover. I do not think so. The Saudis play the long game.
    5. Airlines have pricing power with just a few carriers around, for now.

  • Reply to

    JBLU is going to 20+ range

    by listen_jockers Nov 26, 2014 11:10 AM
    ajitmd2000 ajitmd2000 Dec 11, 2014 12:41 AM Flag

    I would suggest that you download income statement from their website to Excel. A lot of the jet fuel had been hedged until recently. Now the hedges are coming off. Look at jet fuel cost, went from $3.50/gal to $1.90/gal approx. Fuel is 37% of cost so far. Do the math. Hard to believe. They could be making at the rate of $2/s, unless there is recession or huge price pressure. Jet Blue stock lags other carriers.

    Somebody please check the math.

  • Reply to


    by balduscus Dec 16, 2014 8:49 AM
    ajitmd2000 ajitmd2000 Dec 16, 2014 6:17 PM Flag

    I suspect the market is factoring economic disruption due to falling price of oil. Bank loan defaults, etc like 1998. Unintended consequences. Otherwise, jblu will do ok. Some has been priced in.

  • ajitmd2000 ajitmd2000 Dec 23, 2014 5:59 PM Flag

    Those hedges will be coming off soon. Fuel is 30% of e lenses. Plug in those numbers. The EPS look too good that I wonder if I made a mistake. Did the same with JBLU where fuel is 36% of expenses.

    I think WS thinks that next year oil prices will go back above $100/B. I don't think so. New reserves, new drilling tech, etc will keep supply up. Dead growth is lame. Increase energy efficiency due to new tech too.

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