American Airlines raises revenue forecast on robust travel demand.
American Airlines Group Inc is the largest airline in the world, founded in 1930. Over the years, American has created more than 900,000 jobs worldwide and supported about 1,400 nonprofits.
Against the background of weakening restrictions in connection with Covid-19 in many countries, before the start of the summer season, airlines had a sharp increase in the number of ticket bookings.
In this regard, American Airlines expects revenue growth for the quarter by 11-13% compared to the level before the pandemic against the previous forecast of 6-8%.
However, the cost of fuel will increase significantly during this period, and US air carriers are not insured against fluctuations in oil prices, unlike European companies. Nevertheless, the airline is confident that it will be able to compensate for the costs through revenue growth.
Since the beginning of 2022, American Airlines shares have dropped more than 4.5%
Rising airfares do not undermine air travel demand prospects.
Long-term investors may consider the ability to purchase AAL shares at current levels.
Shares of American Airlines (NASDAQ: AAL) lost price last year, as did other airlines due to severe pandemic restrictions. The stock has fallen 34.3% in the past 52 weeks, losing 4.6% in 2022 alone.
American Airlines weekly schedule.
Source: investing.com
The airline’s market capitalization was $11.1 billion. The annual trading range is within the boundaries of $12.44 and $26.04.
In the domestic US market, the air giant leads with a share of almost 20%, beating S, southwest Airlines, Delta and United Airlines.
According to the financial report for the first quarter of April 21, the company’s revenue amounted to $8.9 billion, of which 7.8 billion was for passenger traffic.
Latest financials
On April 21, American Airlines released its first-quarter report. Revenue amounted to $8.9 billion, 7.8 billion of which fell on the passenger transportation segment.
Adjusted loss per share decreased to $2.32 per share, down from 4.32 last year. The airline’s liquidity at the end of the reporting period amounted to 15.5 billion dollars.
American Airlines CEO Robert Isom stated:
“The demand prerequisites are very strong and we expect to start making a profit again in the second quarter (based on current fuel cost estimates).”
While maintaining the rate of booking, the company has hope to restore passenger traffic in the second quarter to 92-94% of the figures for Q2 2019.
Before the release of the report, AAL shares were trading around $21, while at the time of writing the value was $17.10.
American Airlines stock outlook
In general, AAL shares have a “neutral” rating, and the average 12-month target level of $19.06 assumes a growth potential of more than 10%. The range of estimates is limited to $9 and $26.
In other words, fundamental analysis allows stocks to rise more than 32%.
In terms of cash flow, growth and relative value, the company receives 2 points out of 5 possible. With an overall score of 2 points, the company remains “on par with the market.” However, these indicators reflect the impact of COVID-19 on the airline’s revenue and profit.
Analysts believe that in the coming weeks, AAL shares will form a “springboard” for further growth between the $16.5 and $17.5 marks.
The growth forecast is that AAL shares will rise to between $16.5 and $17.5 in the coming weeks. After that, the stock could potentially begin a new stage of growth.
For investors who are not worried about volatility in the short term, they can buy shares already at current levels. In this case, the target will be the target level of analysts at $19.06.
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