American Airlines Shares Rise Pre-Market as Q4 Loss Narrows
American Airlines shares rose nearly 2% in pre-market trading on Thursday after the company reported a smaller loss in the fourth quarter as a result of strong travel demand.
The airline reported an adjusted net loss of $921 million, or $1.42 per share, compared to a loss of $2.2 billion, or $3.86 per share, a year ago, Reuters reported. That was better than the market expectations of $-1.72 per share. In comparison with a year ago, the company’s total operating revenue was $9.43 billion versus $4.03 billion.
American Airlines said it will continue to match its forward capacity with observed bookings trends. Based on current trends, the company expects its first-quarter capacity to be down approximately 8% to 10% compared to the first quarter of 2019. American expects its first-quarter total revenue to be down approximately 20% to 22% versus the first quarter of 2019, the press release noted.
American Airlines stock rose nearly 2% in pre-market trading on Thursday. The stock slumped nearly 4% so far this year after surging about 14% in 2021.
“American Airlines reported 4Q21 adjusted loss of $921 MM, slightly above our estimate of a loss of $922 MM. American is seeing improvement in business traffic and expects international traffic to improve as omicron abates,” noted Helane Becker, equity analyst at Cowen.
“We expect these shares are likely to trade up in the morning as the company is focused on returning capacity to pre-pandemic levels and improving the balance sheet.”
American Airlines Stock Price Forecast
Eight analysts who offered stock ratings for American Airlines in the last three months forecast the average price in 12 months of $18.94 with a high forecast of $23.00 and a low forecast of $10.00.
The average price target represents a 9.42% change from the last price of $17.31. From those eight analysts, one rated “Buy”, five rated “Hold” while two rated “Sell”, according to Tipranks.
Morgan Stanley gave the base target price of $21 with a high of $33 under a bull scenario and $10 under the worst-case scenario. The investment bank gave an “Equal-weight” rating on the airline company’s stock.
“We rate American Airlines (AAL) Equal-weight. Following the stock’s sell-off the risk-reward looks more balanced. AAL arguably has the highest deleveraging potential of any airline by mid-decade though this could also be a show-me story in the near-term,” noted Ravi Shanker, equity analyst at Morgan Stanley.
“We expect AAL to be a strong beneficiary of the rising tide in 2022 esp. in International and corporate though its Asia exposure means that the tailwind is likely to be the last to show up (but is likely to see significant pent-up demand when it does). Mgmt. is also sounding better on near-term costs compared to some of its large peers and if it can keep 2022 CASMxF to LSD-MSD above 2019 levels, this could drive upside to numbers.”
Several other analysts have also updated their stock outlook. Evercore ISI raised the target price to $19 from $17. BofA Global Research lifted the price objective to $10 from $7. Citigroup cut the price target to $20 from $20.5. Evercore ISI upped the target price to $17 from $15.
Technical analysis also suggests it is good to sell as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong selling opportunity.
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