Who wins with weaker oil?
If commodities keep getting weaker this summer, airlines stocks will benefit
One of my key themes for this summer is weaker (relatively speaking) commodities. If I'm right (and I have been so far), one of the biggest beneficiaries will be the airline sector. I know we all hate these stocks but JPMorgan's legendary airline analyst Jamie Baker is basically saying to hold our noses and buy this morning.
Notable Calls, as always, has the crucial points rounded up nicely:
- AMR Corp (NYSE:AMR) to Overweight from Neutral with a $9.50 price target (prev. $8.50)
- JetBlue (NASDAQ:JBLU) to Overweight from Neutral with a $8.00 price target (prev. $7.00)
According to JPM Jet fuel prices have declined $0.30 per gallon since April 29, representing a potential annualized industry benefit approaching $3.5 billion. And yet not a single estimate has been revised during this time. They’re not entirely sure why (they have some ideas), and would therefore suggest investors increase their exposure ahead of an expected upward surge in consensus estimates in coming weeks. For the second time in as many weeks, they are raising their estimates and target prices, with AMR and JBLU targets rising by an amount sufficient to warrant upgrades from Neutral to Overweight
This has me thinking about where else estimates may be too low. Head over for all the details.
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