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Who wins with weaker oil?

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Stephan Savoia/AP/File

(Read caption) In this Thursday, Jan. 20, 2011 photo a Jet Blue jet taxis at Boston's Logan International Airport. J.P. Morgan's airline analyst says it's time to buy airline stocks, writes guest blogger Joshua M. Brown.

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One of my key themes for this summer is weaker (relatively speaking) commodities. If I'm right (and I have been so far), one of the biggest beneficiaries will be the airline sector. I know we all hate these stocks but JPMorgan's legendary airline analyst Jamie Baker is basically saying to hold our noses and buy this morning.

Notable Calls, as always, has the crucial points rounded up nicely:

- AMR Corp (NYSE:AMR) to Overweight from Neutral with a $9.50 price target (prev. $8.50)

- JetBlue (NASDAQ:JBLU) to Overweight from Neutral with a $8.00 price target (prev. $7.00)

- US Airways Group (NYSE:LCC) price target moves to $18.00 from $13.50. The name remains OW rated.

According to JPM Jet fuel prices have declined $0.30 per gallon since April 29, representing a potential annualized industry benefit approaching $3.5 billion. And yet not a single estimate has been revised during this time. They’re not entirely sure why (they have some ideas), and would therefore suggest investors increase their exposure ahead of an expected upward surge in consensus estimates in coming weeks. For the second time in as many weeks, they are raising their estimates and target prices, with AMR and JBLU targets rising by an amount sufficient to warrant upgrades from Neutral to Overweight

This has me thinking about where else estimates may be too low. Head over for all the details.

Source:

Airlines: Don't Wait, Just Buy - J.P. Morgan (Notable Calls)

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