American Airlines (AAL, Financial) saw its stock rise by 3.24% recently. This increase followed upgrades from three Wall Street investment banks, Jefferies, TD Cowen, and Melius Research, which raised their ratings for AAL from "hold" to "buy." The upgrades are attributed to improvements in domestic and corporate travel demand, as well as a renewed exclusive credit card deal with Citibank.
Melius Research analyst Conor Cunningham noted that the renewed Citibank agreement is expected to generate at least $560 million in high-margin revenue by 2025. Additionally, American Airlines is working to regain lost market share in business travel. Over the past three months, AAL's stock has surged more than 50%, with short interest dropping to 6.5% of the float, the lowest since early last year, according to S3 Partners.
Despite the recent gains, some analysts remain cautious due to past misjudgments in domestic demand. Among analysts covering the stock, 11 rate it as "hold," 2 as "sell," and 13 as "buy." Although the overall rating is at its highest since early 2020, it still lags behind peers like Delta Air Lines (DAL) and United Airlines (UAL).
TD Cowen analyst Tom Fitzgerald, who has set a $25 price target for AAL, the highest on Wall Street, believes there are still opportunities for investors to benefit from earnings revisions. He expects performance improvements to enable further debt repayment, increasing shareholders' equity in the company.
