An improving industry backdrop and new credit card deals made Bernstein enthusiastic about American Airlines. The firm upgraded its rating on the airline to outperform from market perform and raised its price target to $24 from $14. The new price target means shares could rise nearly 40% from Monday’s close. Analyst David Vernon said American Airlines’ fourth-quarter profit guidance reflected positive pricing and revenue trends across the industry. The company said in October it expected adjusted profit per share to be between 25 cents and 50 cents. American Airlines expected adjusted earnings per share to be as high as $1.60, beating analysts’ expectations. 2024 AAL YTD Peak AAL “American Airlines is closer to the haves than the haves,” Vernon wrote in a note on Monday. “AAL’s deleveraging capabilities strengthen the company’s outlook due to an improving industry backdrop and new exclusive co-branded credit card deals.” Additionally, the company’s co-branded credit card partnership with Citibank will be effective in January 2026. “This significant growth in a stable revenue stream helps us emerge from a corporate (and) institutional revenue recovery that has dragged into late ’25,” Vernon said. “In the long term, such a large, stable cash flow, ultimately worth about ($12B) changes the narrative for an airline that has been criticized for its high leverage, and AAL’s ability to pay down debt more easily strengthens the company’s prospects,” Vernon wrote. The stock rose 1.3% in premarket trading on Tuesday. The stock is up 24.9% year to date. Analyst sentiment on the stock is tepid. Of the 23 investors covering American Airlines, 15 rate it a hold, while seven rate it a buy or strong buy, according to LSEG. One analyst rates the stock Underperform.
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