Face Covering Mandate Pushes JBLU Higher

The security still suffers a roughly 56% year-to-date deficit

Deputy Editor
Apr 28, 2020 at 9:34 AM
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Members of the airline sector have had a tough time digging themselves out of their mid-March trough, and JetBlue Airways Corporation (NASDAQ:JBLU) is no exception. The stock has been trading sideways for the most part, with its early April surge swiftly cut down by the $12 region, and even more pressure emerging at the 30-day moving average.

Today, however, JBLU is trying to change its luck, up 3.1% at $8.37, after becoming the first major U.S. airline to require face coverings for its customers during travel. The mandate is, of course, in an effort curb the spread of COVID-19, and will become effective on May 4. 

Cowen and Company responded to the order by cutting its price target to $9 from $10. Coming into today, the consensus 12-month price target of $12.50 sat at a 53.9% premium to last night's close. On the other hand, eight of the 12 analysts covering JBLU consider it a "hold," while just three say "strong buy" -- not surprising considering the stock's 56% year-to-date deficit.

While calls are still outnumbering puts overall, the appetite for these bearish bets is heavier than usual. This is per JBLU's 50-day put/call volume ratio of 0.76 at the International Securities Exchange (ISE), Cboe Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 89th percentile of its annual range. 

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