Falling oil prices and an improving economy have been a boon for airline stocks. Now one of them, JetBlue, is poised to rake in even more cash with a new plan to add seats and slap on additional fees for bags.
This year has been great for the transportation sector. While the S&P 500 is up 11 percent year-to-date, the Dow Jones Transportation Average is up twice as much – 22 percent. It helps when one input becomes a lot cheaper. Crude oil prices have fallen 23 percent since Jan. 1. And within transports, airlines have been in the cockpit piloting the sector to higher altitudes. One phenomenal performer has been JetBlue, which is up an astonishing 57 percent in 2014.
According to one senior Wall Street trader, JetBlue's stock has more room to run, even if he believes these newly announced moves already were priced into the stock.
"Long term, I think it's going a lot higher," said David Seaburg, head of sales trading at Cowen and Company. He Cowen's airline analyst, Helane Becker, increased her price target on JetBlue to $15 in August on the idea that the company would rework its business model.
"The catalyst is out of the bag," Seaburg said. "The industry fundamentals are really supporting this story,and I think there's a lot more runway here."
The technicals are also positive for JetBlue, according to the chart work of one well-regarded analyst.
"They say the trend is your friend and for JetBlue, that trend is higher," said Ari Wald, head of technical analysis at Oppenheimer & Co. "The stock has done a great job respecting its rising 200-day moving average. Through this uptrend over the past few years, you have a tremendous amount of momentum behind it. I think it continues to carry shares higher."
Wald sees shares moving up to where it was trading sometime between 2004 and 2006. That range was roughly between $13.50 and $15.50 per share.
"Aside from some near-term consolidation, which I think ends up being a buying opportunity, I think we hit the upper end of that range," Wald said. "We're going to $15.50."