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Analyst Blog

On Mar 13, 2014, we issued an updated research report on JetBlue Airways Corp. (JBLU - Analyst Report). The company’s fourth-quarter earnings and revenues improved considerably from the prior-year quarter backed by network expansion, cost control and increased focus on differentiated product offerings. JetBlue is expected to benefit from new products, ancillary revenue opportunities and a matured network.

JetBlue Airways has delivered negative earnings surprise in the last three quarters out of four, with an average negative surprise of 15.68%.

We believe that JetBlue’s strong brand name and product differentiation offers customers a unique flying experience. In the coming months, the company expects to generate solid revenues from new products like Mint and Fly-Fi along with ancillary revenue opportunities and a matured network.

With a low-cost structure, the company continues to expand its network footprint in major regions like Boston, Fort Lauderdale, the Caribbean and Latin America which is expected to support future growth. Going forward, the company expects to add new routes from Boston and aims to have 150 flights per day from the region.

However, the global airline industry continues to face challenges from the aftereffects of the European economic crisis, offsetting the positive impacts of increasing air travel demand. On the other hand, the domestic airline industry faces high fixed expenses and stiff price competition. Though fuel prices are low at present, its volatile trend continues to pose significant challenge to the company.

JetBlue Airways currently carries a Zacks Rank #2 (Buy).

Stocks That Warrant a Look

Other better-ranked stocks worth considering in this sector include American Airlines Group Inc. (AAL - Snapshot Report), Hawaiian Holdings Inc. (HA - Snapshot Report) and Southwest Airlines Co. (LUV - Analyst Report). Both American Airlines Group and Southwest Airlines have a Zacks Rank #1 (Strong Buy), while Hawaiian Holdings carry a Zacks Rank #2 (Buy).

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