Morgan Stanley resumes coverage of JetBlue stock with Equalweight rating

On Wednesday, Morgan Stanley (NYSE:MS) resumed coverage of JetBlue Airways (NASDAQ:JBLU) with an Equalweight rating and a price target of $8.00.

The firm provided insights into the airline's future, focusing on JetBlue's strategic plan, known as JetForward, set to unfold in 2025. The assessment acknowledged the significant efforts required to execute the plan and anticipated that the market would more keenly recognize JetBlue's potential in 2026, once key elements of the strategy are operational.

"We like the plan and believe it is simple yet ambitious but the meat of the gains are likely to be back-end loaded between 2026-27," Morgan Stanley said.

JetBlue's management is noted for its decisive steps to move beyond various challenges experienced over the past three years, which include the fallout from the Spirit Airlines (OTC:SAVEQ) deal, the Northeast Alliance (NEA) unwind, the grounding of planes with geared turbofan (GTF) engines, and operational hurdles. The airline is returning its focus to foundational business aspects and is already witnessing early positive results from these efforts.

Morgan Stanley pointed out that while the journey ahead is steep and not all opportunities will be easily attainable, the airline's management is on a clear path to progress.

The financial institution highlighted that if JetBlue can achieve its EBIT uplift target of $800-900 million by 2027 and begin reducing its debt, the stock could potentially yield a significant return, possibly tripling or quadrupling from its current value. However, the market is expected to first seek evidence of a path to profitability by the end of 2025 before fully valuing the stock's potential.

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