Shares of American Airlines Group Inc. (AAL) soared 3% to close at $20.62 on July 14, following the news that the company is lifting its Q2 guidance ahead of its earnings. AAL also stated that it is expecting to report its first positive quarter post-pandemic.
Don't Miss our Black Friday Offers:
- Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
AAL credited factors such as continued momentum in travel demand and forward bookings for its positive outlook. American flew 44 million passengers during the quarter, up 83% from the first quarter and more than five times that of the year-ago period. (See American Airlines stock charts on TipRanks)
The sector was one of the worst-hit when nationwide borders and global travel came to a standstill owing to the pandemic. However, the sector is recovering steadily with the strong vaccine rollout and easing of travel restrictions.
In Q2, the company expects to report revenue of $7.475 billion, and earnings (excluding net special items) are expected to be in the range of $(1.67) to $(1.76) per share. The Streets’ estimates for revenue and earnings are pegged at $7.14 billion and $(2.41) per share.
Additionally, the company forecast an average daily cash build of $1 million, showing a significant improvement over an average daily cash burn of $27 million reported in the first quarter. The company also expects to report approximately $21.3 billion in total available liquidity at quarter-end.
The company’s CEO Doug Parker said, “Our revenue and expense performance in the quarter came in better than expectations, and this was achieved while bringing the operation back up to full capacity and safely transporting a record number of travelers.”
On July 13, Jefferies analyst Sheila Kahyaoglu maintained a Hold rating on the stock and assigned a price target of $24, implying 16.4% upside potential to current levels.
Kahyaoglu said, “Our Hold rating balances our belief that AAL may be the best positioned of the network carriers with the youngest fleet and a strong competitive positioning through its network, with the restrictive nature of AAL’s leverage keeping us on the side-line.”
The stock has an overall Hold consensus rating based on 2 Buys, 4 Holds, and 4 Sells. The average American Airlines price target of $20.83 implies 1% upside potential to current levels. Shares have gained 53.4% over the past year.
According to TipRanks’ Smart Score system, American Airlines gets a 5 out of 10, which indicates that the stock is likely to perform in line with market averages.
Related News:
Why is Tesla in the Spotlight This Week?
Apple to Launch Buy Now, Pay Later Service; Shares Hit Record High – Report
Costco Stock Hits 52-Week High
