In separate reports, Imperial Capital’s Michael Derchin lowered Q1 estimates for both airline companies.
JetBlue indicated an RASM decline of 4-5 percent.
“The Easter shift is now expected to be a 6 point impact on March RASM, versus our 3 point estimate,” Derchin stated.
The analyst reduced the EPS estimate for Q1 from $0.34 to $0.26. The EPS estimates for FY2017 and FY2018 have been lowered from $1.85 to $1.75 and from $2.05 to $1.95, respectively. The change in the FY2017 estimate reflects a reduction in the RASM estimate from an increase of 0.5 percent to flat.
Southwest indicated an RASM decline of 2-3 percent, versus its prior guidance of 0-1 percent, “largely due to close-in yield weakness in February, which has already recovered in March,” Derchin wrote.
The analyst reduced the EPS estimate for Q1 from $0.75 to $0.65. The EPS estimates for FY2017 and FY2018 have been lowered from $4.00 to $3.90 and from $5.15 to $5.05, respectively. The change in the FY2017 estimate reflects a reduction in the RASM estimate from an increase of 0.5 percent to flat.
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Ratings And Upside
Derchin has Outperform ratings on both companies. The price target for JetBlue is at $29, representing 31 percent upside from the current levels, while the price target for Southwest is at $63, representing an upside of 15.6 percent.
“Looking past choppy 1Q17 results, JBLU’s outlook for the balance of FY17 is constructive,” Derchin commented. Separately, he mentioned, “FY18 is likely to be a reflection of LUV’s potential normalized earnings power.”
Latest Ratings for JBLU
|Jan 2017||Argus Research||Downgrades||Buy||Hold|
|Jan 2017||JP Morgan||Upgrades||Neutral||Overweight|
|Jan 2017||Cowen & Co.||Downgrades||Outperform||Market Perform|
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