American Airlines Group Inc. (AAL) soared on Friday after reporting upbeat third-quarter financial results and a significantly improved outlook for 2024. The airline exceeded analyst expectations on both revenue and earnings, sending its share price up by 2.2% to $13.06.
For the third quarter, American Airlines reported total operating revenue of $13.647 billion, a 1.2% increase year-over-year. This beat the consensus estimate of $13.471 billion. While the adjusted operating margin slipped slightly to 4.7% from 5.4% in the previous year, the company’s adjusted earnings per share (EPS) of 30 cents surpassed the consensus estimate of 15 cents.
Looking ahead, American Airlines raised its 2024 EPS forecast to a range of $1.35 to $1.60, significantly higher than its previous guidance of $0.70 to $1.30. This new projection also eclipses the analyst consensus of $1.21. The airline expects its operating margin to fall between 4.5% and 5.5% for the year.
The positive earnings report sparked a flurry of activity among analysts, who adjusted their price targets on AAL stock. Jamie Baker at JP Morgan maintained his Overweight rating but increased the price target from $15 to $20, reflecting his confidence in the airline’s future performance. Conversely, Andrew Didora at B of A Securities kept his Underperform rating, but raised the price target from $9 to $10, suggesting a more cautious stance. TD Cowen analyst Thomas Fitzgerald maintained a Hold rating on AAL, also increasing his price target from $9 to $10.
The divergence in analyst opinions highlights the complex factors influencing American Airlines’ future prospects. While its recent financial performance is encouraging, investors will be closely watching the airline’s ability to navigate a dynamic industry landscape, including potential economic headwinds and ongoing pressures on operating costs.
