Damn it... I was so tempted to short it after the ipo!!!! On Tue, 7 May 2002, W Wilson wrote: > JetBlue shares drop as initial coverage lukewarm > NEW YORK, May 7 (Reuters) - Shares of low-cost carrier JetBlue Airways Co= rp. > (JBLU) sank nearly 10 percent on Tuesday after Wall Street analysts > initiated coverage with lukewarm recommendations on the stock and one eve= n > told investors to sell some of the shares. >=20 > Unusually, the research reports came from analysts working at three firms > that had helped JetBlue sell shares to the public. Wall Street has been > under fire by regulators for putting out overly bullish research to win a= nd > retain investment banking business, like new stock offerings. >=20 > Shares of JetBlue had reached an all-time high at $55.15 Monday, more tha= n > double their $27 offer price, but sank as low as $49.27 on Tuesday. The > shares were off $4.50, or 8.25 percent, at $50.00 on Tuesday afternoon on > Nasdaq. >=20 >=20 > UBS Warburg started JetBlue shares at "reduce" given their lofty price, > Merrill Lynch rated them a mid-term "buy" on anticipation of strong > financial growth, and Morgan Stanley launched coverage at "equal-weight," > saying the shares appeared fairly valued based on the 2003 earnings outlo= ok. >=20 > JetBlue raised $158.4 million in its initial public offering managed by > Morgan Stanley (MWD), Merrill Lynch & Co Inc. (MER), UBS Warburg and Raym= ond > James. >=20 > Two-year-old JetBlue was one of only a handful of U.S. airlines to report= a > first-quarter profit and had an operating margin of about 17.5 percent du= e > to sharply lower costs than the major carriers. The eight largest U.S. > carriers reported net losses totaling $2.4 billion in the first quarter. >=20 > The carrier has been compared to Krispy Kreme Doughnuts Inc. (KKD), UBS > Warburg airline analyst Sam Buttrick wrote in a research note, "But let > there be no mistake, JetBlue is an airline." Krispy Kreme, like Jetblue, = saw > shares jump sharply after its IPO in part on expectations for strong grow= th > potential. >=20 > Buttrick noted that JetBlue faces risks fundamental to airlines from > competition, volatile energy costs and labor. >=20 > The shares were arguably fairly valued for the IPO and have jumped sharpl= y > in part because of the limited size of the deal, brand awareness and > lackluster movement in the shares of major carriers, he wrote. >=20 > Buttrick said that at $54 a share, JetBlue stock appears overvalued at 35 > times his fiscal 2003 earnings forecast of $1.55 a share. He set a 12-mon= th > price target of $36 a share to $38 a share, 24 times his 2003 earnings > forecast. >=20 > Merrill analyst Michael Linenberg said JetBlue is "arguably the > fastest-growing airline in the U.S." in rating the carrier a mid-term "bu= y." >=20 > Morgan Stanley said JetBlue has a competitive advantage in worker > productivity and fuel-efficient newer A320 jets. >=20 > "The shares appear fairly valued based on our 2003 earnings outlook, but = we > believe above-average growth could spur a premium valuation over time," > Morgan Stanley said in a note. >=20 >=20 > =A92002 Reuters Limited. >=20