Carl Icahn’s Surprise Investment in JetBlue Could Have Long-Term Impact, Analyst Says
JetBlue Airways Corp. received a significant boost on Tuesday as billionaire activist investor Carl Icahn disclosed a 9.9% stake in the company. This unexpected investment has the potential to have a lasting impact, according to Citi analyst Stephen Trent.
Icahn, in a filing late on Monday, stated that JetBlue’s stock was undervalued and represented an attractive investment opportunity. The filing also revealed his intent to influence the direction of the company, which is reflected in the Schedule 13D document filed, rather than the more commonly seen Schedule 13G filed by investors without such intent.
While high-profile investments in the airline sector often come and go, Trent believes that Icahn’s involvement could lead JetBlue down a better strategic path. The filing indicated that Icahn intends to have discussions with members of JetBlue’s management and board of directors regarding the possibility of board representation. This could play a crucial role in shaping the airline’s future.
JetBlue and Spirit Airlines Inc. are currently appealing a recent ruling that blocked their merger. Additionally, an earlier court decision also blocked JetBlue’s Northeastern Alliance with American Airlines Group Inc., citing concerns about stifling competition. Trent highlights that aside from these legal challenges, JetBlue faces other important long-term strategic decisions.
Despite the recent setbacks, JetBlue’s stock has performed well this year, with shares up more than 25% compared to gains of around 4% for the broader index and approximately 3% for the U.S. Global JETS ETF. However, the stock is down 18% in the past 12 months, while the S&P 500 index has seen gains of about 20%.
Trent maintains a neutral rating on JetBlue’s stock, with a price target of $5.50, representing a downside of approximately 21% over Tuesday’s prices. The coming months will reveal the extent of Icahn’s influence on JetBlue and whether his investment will have a lasting impact on the airline’s future prospects.
Analyst comment
Positive news – Carl Icahn’s surprise investment in JetBlue could have a long-term impact, according to analyst Stephen Trent. Icahn’s involvement could lead JetBlue down a better strategic path and his intent to influence the direction of the company indicates potential positive changes. However, Trent maintains a neutral rating on JetBlue’s stock with a downside price target, indicating uncertain short-term prospects.
