Gary Chase, analyst with Lehman Brothers, posted a midnight oil research note tonight on the departure of John Harvey from JetBlue.
Chase says to expect some “near-term weakness” in JetBlue’s shares, especially tomorrow. However, he also does not see this news as being indicative of any “imminent breakdown” in JetBlue’s fundamentals.
However, Chase also commented,
“This news comes at a bad time. Oil is reaching new highs almost daily and concern about competitive impact from Virgin America among other things are weighing on JBLU sentiment specifically. JBLU is heavily shorted (highest short interest in the group) amid concerns about Virgin impact especially. To boot, on the surface, it looks very expensive. Bottom line, the path of least resistance is to be negative for tomorrow and possibly the next several trading sessions.
Now for the not so obvious…
We believe JBLU is a company in need of restructuring. Its valuation on current consensus is not the issue. Its true earnings potential is the issue, in our view. Importantly, we see significant upside opportunity on the cost side of the ledger and in the potential for larger network restructuring.”
Ticker: (JBLU:Nasdaq)
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