American Airlines upgraded as Wolfe Research gets ‘a bit more positive on airlines’

American Airlines (NASDAQ:) shares were lifted to Outperform from Peer Perform at Wolfe Research on Monday, with the firm assigning the stock a price target of $17 per share.

Analysts at the firm told investors in a note that they selectively recommend increasing exposure to airlines as domestic capacity growth slows.

“Our Airline Index has underperformed the S&P 500 for 4 straight years, and every airline stock underperformed last year into accelerating capacity growth and weakening pricing,” the analysts explained.

“We see mixed trends entering ’24 but potential for RASM to inflect back positive y/y later this year as capacity growth slows,” they added. “Thus, we view 2024 as a bridge year for airlines as EPS hopefully troughs.”

As a result, the firm is “growing a bit more positive on airlines.” Wolfe Research also noted that AAL is the only airline that hit its capacity and CASMx guidance in 2023, while it has “no MAX-9 exposure and less risk from Tel Aviv in 1Q and tough transatlantic comps in 2Q.”