JetBlue Airways (JBLU, Financial) experienced a sharp decline in its share price, dropping by approximately 13% this week. This downturn comes after a negative outlook from Goldman Sachs, which issued a sell rating on the stock and set a price target of $5.50 per share. The investment bank's assessment has significantly influenced JetBlue's stock movement.
Currently, JetBlue shares are trading at $6.15, reflecting a positive change of 1.82% from the previous day. However, the airline faces substantial challenges which are impacting its financial standing. Notably, the stock's Altman Z-score of 0.7 places it in the distress zone, signaling a potential risk of bankruptcy within the next two years. Additionally, the Piotroski F-Score remains low at 3, suggesting poor business operations.
JetBlue's financial strength is further questioned by its continuous issuance of new debt, amounting to $4 billion over the past three years. This action highlights a significant reliance on borrowing, which could burden its balance sheet. Moreover, the company has suffered operating income losses in 67% of the past 12 quarters, further indicating unstable financial performance.
On a positive note, JetBlue's Beneish M-Score is -2.91, indicating that the company is unlikely to be manipulating its financial statements. Furthermore, the company's price-to-book ratio stands at 0.81, which may suggest the stock is undervalued relative to its assets. According to the GF Value assessment, JetBlue is considered "Modestly Undervalued" with a GF Value of $6.90, providing some potential upside for investors.
Despite the current challenges, JetBlue has demonstrated a 28.93% increase in price over the past 12 weeks and a significant 45.93% increase in the past 52 weeks. These gains reflect a potential for recovery, although the airline's future performance will likely depend on its ability to navigate the existing industry hurdles and improve its financial health.
