J.P. Morgan Ups Southwest Airlines, Alaska Air Ratings Tuesday May 2, 5:49 PM EDT SAN FRANCISCO (Dow Jones) -- J.P. Morgan analysts on Tuesday upgraded Alaska Air Group (ALK) and Southwest Airlines (LUV) as higher revenue looks likely next year, but cut the ratings on Frontier Airlines (FRNT) and JetBlue Airways because of revenue- growth concerns. The moves helped send Alaska Air (ALK) (ALK) shares up more than 5% while Southwest (LUV) stock rose less than 1%. Frontier and JetBlue traded lower. Broadly, J.P. Morgan expects that the industry's recovery will continue into 2007, instead of braking. "Consensus estimates imply 2006's recovery grinds to a halt next year," the analysts wrote. "So, too, did many of our earlier estimates." For Southwest, which is helped by fuel hedges and is making money with low fares, the rating increase means an overweight rating, up from neutral. Higher airfares and under-control costs will help the company's results. "With LUV shares having corrected 10% from a recent high (vs. S&P 500 down 1%) and trading at 17.0x 2007 earnings, we believe an attractive, low-risk opportunity now exists," wrote J.P. Morgan analysts. Alaska's rating was also bumped up to overweight from neutral by J.P. Morgan, which expects 5% higher mainline revenue and says the stock is attractively valued. "With an estimated 30% of Alaska revenue generated in Southwest strength markets, Alaska's west coast network is uniquely positioned to benefit from LUV's full-court press for higher fares," the analysts wrote. The downgrade of Frontier (FRNT) brought the rating to underweight from overweight, and contributed to the stock's more than 3% decline on Tuesday. As a threat to Frontier's revenue, J.P. Morgan cited competition from United Airlines (UAUA) , which exited bankruptcy earlier this year. "We now forecast that Frontier will be the industry's least-profitable airline in 2007 (F2008), after JetBlue," wrote the J.P. Morgan analysts. JetBlue also gets an underweight rating at J.P. Morgan, down from neutral, citing the shares' valuation. "It seems like a strange combination; the airline with the least profitability is also the most expensive stock we follow," the analysts wrote. J.P. Morgan expects JetBlue's revenue to grow less than the company itself expects. Meanwhile, established legacy carriers are defending their routes with cheap tickets to keep the low-fare carrier at bay. The J.P. Morgan analysts also put a $100 price target on US Airways Group (LCC) ( LCC) stock by mid-year 2007, more than double the current price. The boosted price target is based on expectations the company's profit next year will range from $3.15 to $11.20. Shares of US Airways (LCC) jumped 6.9% to $46.71 on Tuesday. J.P. Morgan is a market maker for Frontier and JetBlue stock, and the firm has been involved in managing equity and or debt offerings from Southwest. J.P. Morgan has also done investment banking work for Southwest and expects to do more banking work with the carrier in the next three months, as well as JetBlue. Alaska Air Group (ALK), JetBlue, Southwest, US Airways (LCC) and Frontier have been clients of J.P. Morgan, as well. Roger & Amanda La France