Analyst Update: JetBlue Airways Corporation, Southwest Airlines Co, and Verizon Communications Inc.

Analysts adjusted their ratings on JBLU, LUV, and VZ

by Alex Eppstein

Published on Dec 10, 2014 at 12:51 PM
Updated on Apr 20, 2015 at 5:32 PM

Analysts are weighing in today on transportation issues JetBlue Airways Corporation (NASDAQ:JBLU) and Southwest Airlines Co (NYSE:LUV), as well as wireless provider Verizon Communications Inc. (NYSE:VZ). Here's a quick look at today's brokerage notes on JBLU, LUV, and VZ.

  • JBLU has rallied 2.7% to trade at $15.45, following a price-target hike to $17 from $13 at Barclays, which reiterated its "equal weight" rating. Generally speaking, airline stocks are having a banner day, propped up by positive analyst attention and sinking oil prices. Despite JetBlue Airways Corporation's intraday gains and 81% year-to-date advance, Wall Street is brimming with skepticism toward the stock. A lofty 18.2% of the equity's float is sold short, which would take almost a week to cover, at typical daily trading levels. What's more, JBLU's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.13 ranks higher than nearly three-quarters of similar readings from the last year -- though a portion of these may have been initiated by shareholders hedging their long stock positions against a pullback.

  • LUV is participating in the sector-wide airline rally, too -- up 3.8% at $42.28 on a $10 price-target hike to $50 at Barclays, which also reiterated its "overweight" assessment. In fact, the stock earlier touched another record peak of $42.59, and has more than doubled in value this year. Nevertheless, short-term options traders have been focused on puts over calls recently, per Southwest Airlines Co's Schaeffer's put/call open interest ratio (SOIR) of 0.87, which ranks in the 81st percentile of its annual range. Should option bears start to capitulate amid LUV's long-term uptrend, the equity could catch a tailwind.

  • On the other hand, it's been a rough day for telecom stocks, which are caught in Wall Street's bearish crosshairs. VZ, in fact, is down 1.4% to hover near $46.27, following a pair of price-target reductions. Specifically, Oppenheimer and Morgan Stanley trimmed their respective targets to $54 and $51, while reaffirming the equivalent of "buy" opinions. Longer term, Verizon Communications Inc. has had a rough go of it, dropping nearly 6% in 2014. Nevertheless, traders at the ISE, CBOE, and PHLX have bought to open nearly three calls for every put during the last 10 weeks. The resultant 50-day call/put volume ratio of 2.72 is higher than 81% of similar readings from the previous 12 months, hinting at a pronounced bullish bias. A capitulation among these optimists could usher in a fresh wave of selling power.

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