Warburg Analyst Advises Investors to Sell JetBlue
UBS Warburg analyst Samuel Buttrick on Tuesday advised investors to sell JetBlue Airways Corp. shares less than a month after his firm helped manage the discount airline's initial stock sale.
Buttrick started coverage of JetBlue (ticker symbol: JBLU) at "reduce," one of seven companies with the firm's second-lowest rating. He said in a note to clients that shares are too expensive after doubling from their IPO price.
Buttrick's recommendation stands out because Wall Street analysts' reluctance to criticize investment-banking clients has gotten them into trouble.
The Securities and Exchange Commission and the New York state attorney general's office are investigating possible conflicts of interest at Wall Street firms.
"Warburg is clearly trying to send a message that they will be independent on the research side from the investment-banking side," said Thomas Angers, director of research at Glenmede Trust Co. "You wouldn't have seen this a year ago."
Less than 1% of the more than 900 companies Warburg covers have "reduce" ratings, according to Thomson Financial/First Call. The firm has no "sells," its lowest possible ranking.
About 3% of all analysts' ratings are "sells," according to Bloomberg data, while 62% are "buys" and 34% are "holds."
Buttrick didn't return calls seeking comment.
"Saying JetBlue may be a little overextended is what should happen," said Erick Maronak, director of research at NewBridge Partners. "More firms should be willing to step up and say that a stock is ahead of itself."
Morgan Stanley Dean Witter & Co., which led JetBlue's IPO last month, started the stock at "equal-weight," saying shares are fairly valued through 2003. Merrill Lynch & Co., which also participated in the sale, placed a long-term "strong buy" on the shares.
"Maybe the scrutiny is getting analysts' ratings to be more accurate," said Nick Redfield, a transportation analyst with Banc One Investment Advisors Corp.
Morgan Stanley analysts William Greene and Kevin Murphy didn't return calls for comment, and spokeswoman Diana Quintero declined to comment. JetBlue also declined to comment.
JetBlue raised $158.5 million on April 12 by selling 5.87 million shares at $27 each. The stock surged 66% on its first day of trading and climbed as high as $54.50, about double its initial price.
Shares of the New York-based airline fell $4.90 to $49.60 Tuesday on Nasdaq.
- Passenger Increase Boosts JetBlue's Profit Jan 30, 2004
- JetBlue Announces New Routes in California Mar 11, 2004
- JetBlue's on-time flights, revenue fall in February Mar 09, 2007
