- Wednesday, October 16, 2024
American Airlines stock received a Buy rating on Monday as Wall Street's confidence in the company continues to grow following its fourth-quarter earnings. Citi analysts upgraded the stock from Neutral to Buy, emphasizing that mainline airlines like American have positioned themselves favorably in the postpandemic landscape due to their diverse revenue streams and premium offerings.
Citi Analysts Optimistic
Citi analyst Stephen Trent stated in a note on Monday that American Airlines' ongoing focus on deleveraging and its sustained low capital expenditures, combined with industry-wide capacity constraints, should continue to benefit the airline. Trent set a target price of $20, indicating a potential gain of 32% from Friday's closing price.
While Trent still favors Delta Air Lines and United Airlines, his upgrade places American Airlines ahead of the Neutral-rated Southwest Airlines.
Shifting Sentiment on Wall Street
According to FactSet data, sentiment towards American Airlines stock on Wall Street is starting to shift. Currently, 43% of analysts covering the shares rate them as Buy, marking the highest rating since November 2019.
Overall, this upgrade signals growing optimism among investors regarding American Airlines' future prospects.
American Airlines Shares Soar on Strong 2024 Forecast
American Airlines saw a 10% surge in its shares on Thursday after the company revealed a stronger-than-expected forecast for 2024. The airline is anticipating full-year earnings in the range of $2.25 to $3.25, surpassing the analysts' estimated $2.14. The fourth-quarter earnings also exceeded expectations.
Analysts Bullish on American Airlines
TD Cowen, one of the leading financial services firms, upgraded American Airlines shares from Market Perform to Outperform on Friday. According to analyst Helane Becker, American Airlines has managed to regain its momentum. She believes the company's 2024 guidance is highly feasible and commends its generation of free cash flow as well as its debt reduction efforts.
Similarly, Seaport Research revised their stance on the stock, changing it from Neutral to Buy. Analyst Daniel McKenzie expressed confidence in American Airlines' earnings potential and identified room for further stock price growth. McKenzie has set a price target of $23.
Strong Industry Dynamics Favor American Airlines
One factor driving American Airlines' positive outlook is the favorable supply and demand equilibrium in both the domestic and international markets. According to McKenzie, American Airlines is poised to benefit extensively from this industry trend.
A Smooth Course Ahead for American Airlines
Following a challenging start to the year, American Airlines appears to be on a smoother trajectory with its fourth-quarter earnings. As a result, the stock has experienced a 10% increase year-to-date and was up by an additional 1.6% in premarket trading on Monday.
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