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American Airlines: Why Wall Street Recommends a ‘Buy’

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Analysts’ bullish stance

American Airlines (AAL) has a consensus rating of ~1.76 from analysts polled by Thomson Reuters (TRI). There’s a consensus “buy” rating on the stock.

There’s been an upward shift in analysts’ recommendations for American Airlines since its third-quarter results and its encouraging guidance for the fourth quarter.

About 88% of analysts have provided bullish recommendations on AAL. Six of the 17 analysts tracking the stock have given it “strong buy” ratings, while nine have given it “buy” ratings. Only two analysts have given it “hold” ratings. Analysts’ target price of $47.59 on the stock represents a potential 29.5% rise from its current price of $36.75.

AAL has received sharp upward revisions to its EPS estimates for 2018 and 2019. The mean estimate for its 2018 EPS increased to $4.53 from $4.24 on October 24. Its 2019 EPS estimate improved to $5.31 from $5.05.

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Peers’ ratings

Analysts are bullish on the entire airline industry (JETS) and have provided “buy” recommendations on United Continental (UAL), Southwest Airlines (LUV), and Delta Airlines (DAL).

Six of the 17 analysts tracking United have given it “strong buy” ratings, three have given it “buy” ratings, and the remaining eight have given it “hold” ratings. Analysts’ target price of $101.87 represents a potential 10.4% rise from its current price of $92.26.

Six of the 19 analysts tracking Southwest have given it “strong buy” ratings, seven have given it “buy” ratings, five have given it “hold” ratings, and one has given it a “sell” rating. Its target price of $62.94 represents a potential 19.7% increase from its current price of $52.58.

Six of the 18 analysts tracking Delta have given it “strong buy” ratings, nine have given it “buy” ratings, and one has given it a “hold” rating. Its target price of $67.76 reflects a potential 21.2% rise from its current price of $55.90.

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