JetBlue Airways stock has been on a tear lately -- but the run of gains could soon come to an end due to the war in Iran and a lofty valuation, according to Citi.
Analyst John Godyn cut his rating for the low-cost carrier to Sell from Neutral on Friday, warning that "risk-reward has turned negative," with shares at about 4% off their 52-week high as of Thursday's close.
The downgrade weighed on the stock on Friday. JetBlue slipped 3.6% to $6.09 in early trading. The S&P 500 was 0.4% higher.
Shares have jumped 36% in 2026, through Thursday, powered higher by resilient travel demand for travel, cost cuts, and the demise of rival cheap airline Spirit opening up new routes for JetBlue.
But Godyn doesn't think those gains will last.
Leisure-focused travel demand could take a hit due to the conflict in the Middle East driving up inflation, the analyst said. Carriers with business and premium offerings like Delta and United could weather that, but JetBlue's revenue per available seat mile (RASM) would take a hit.
RASM is a key profitability metric for airlines because it measures their financial efficiency regardless of fleet size or overall distance flown.
The stock may also struggle to maintain its valuation. JetBlue is targeting at least $1 a share of full-year earnings by 2028. Shares are currently fetching about 6.2-times that, roughly in line with peers.
That suggests that even if the airline does deliver the earnings growth it has promised, "much of this target is already priced in," Godyn wrote.
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