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The 2014 All-America Research Team: Airlines, No. 1: Jamie Baker

< The 2014 All-America Research TeamJamie BakerJ.P. MorganFirst-Place Appearances: 7

Total Appearances: 11

Analyst Debut: 2004

Jamie Baker’s “experience and timing are beyond compare,” cheers one fan of the J.P. Morgan analyst, who extends his dominance on this roster to a seventh year. His superior coverage of the merger between AMR Corp., the operator of American Airlines, and US Airways Group has earned investor loyalty, one fund manager asserts. In September 2013 the analyst upgraded Tempe, Arizona’s US Airways from neutral to overweight, in anticipation of the discount airline’s merger with AMR. The deal closed in December with the stock up 20.5 percent, at $22.55. That performance was in line with the sector’s and well ahead of the broad U.S. market, which gained 5.9 percent over the period. Baker, 46, immediately recommended buying the new entity — Fort Worth, Texas–based American Airlines Group — citing the combined earnings power of the U.S.’s largest carrier, by passenger traffic. Sure enough, the shares took off, climbing 49.4 percent by mid-September, to $37.07, and besting their peers and the broader market by 9.4 and 39.3 percentage points, respectively. The analyst is still upbeat on American Airlines, assigning it a price target of $55.50. Other operators on which he has more recently turned positive are JetBlue Airways Corp. of Long Island City, New York; and Chicago-headquartered United Continental Holdings. He elevated each company from neutral to overweight, in May and July, respectively. JetBlue was likely to appoint a new CEO when David Barger’s contract expires in early 2015, Baker noted, to the benefit of the No. 5 domestic airline. Indeed, management announced in mid-September that president Robin Hayes will succeed Barger in February, and the stock had by then leaped 42.4 percent, to $11.26, leading its peers by 28.9 percentage points. He believes the shares could reach $13.50 and maintains his bullishness on JetBlue. As for his optimism on United Continental, the researcher forecast margin improvements for the second-biggest U.S. airline and further credited its new share buyback program. Through mid-September its stock beat the sector by 3.5 percentage points, rising 8.1 percent, to $49.56. Baker’s price objective for United is $60.50. “Jamie has been hitting on all cylinders,” insists another buy-side backer.

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