Airline Stocks Soar as Analysts Upgrade American Airlines
American Airlines Group Inc. is experiencing a significant surge in its stock prices, thanks to a trio of upgrades from top Wall Street analysts. This upward trend is a welcome change for the airline, which has been working to regain its footing after misjudging domestic demand last year.
Improved Traffic and Revenue Projections
Analysts from Jefferies, TD Cowen, and Melius Research have all raised their recommendations on American Airlines from “hold” to “buy,” citing improved domestic and corporate traffic, as well as the airline’s exclusive credit card agreement with Citigroup Inc. This partnership is expected to generate at least $560 million in high-margin revenue in 2025, according to Melius Research’s Conor Cunningham.
Regaining Corporate Travel Market Share
American Airlines is also making strides in regaining its lost corporate travel market share. As the airline continues to work towards this goal, analysts are becoming increasingly bullish on its prospects. The stock has jumped 5.1% as of 1:01 p.m. during regular trading in New York, with shares rising over 50% in the past three months.
Declining Short Interest
The surge in American Airlines’ stock price can also be attributed to declining short interest. Short bets now account for just 6.5% of free float, the lowest level since early April, according to data from S3 Partners. This decline in short interest suggests that investors are becoming increasingly confident in the airline’s prospects.
Room for Growth
Despite the recent run, many investors remain on the sidelines, waiting for American Airlines to prove itself. However, with 13 buy ratings and a consensus rating at its highest since early 2020, there is still room for growth. As Tom Fitzgerald, a TD analyst, notes, “There is further opportunity for investors to benefit from significant torque in positive earnings revisions.” With improved performance, the company will be able to continue paying down debt, and equity owners can expect to see their share of enterprise value rise accordingly.
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