Index falls as earnings results weigh; pound above $1.33, Bodycote soars
On Tuesday, Citi analysts revised their financial outlook for American Airlines (NASDAQ:AAL), resulting in a lowered price target for the airline’s stock. The new target has been set at $21.50, a decrease from the previous figure of $23.00, while the Buy rating remains unchanged. Currently trading at $13.87, the stock appears undervalued according to InvestingPro analysis, with analyst targets ranging from $14 to $30.
The adjustment in the price target is attributed to two main factors: a projected decline in revenue per available seat mile (RASM) and an anticipated decrease in fuel prices. These elements have been integrated into Citi’s updated model for American Airlines’ financial performance. The airline, which generated $54.21 billion in revenue over the last twelve months, maintains a solid market position despite recent challenges.
According to the latest forecasts, Citi has slightly reduced its first-quarter 2025 earnings per share (EPS) estimate for American Airlines from -$0.25 to -$0.30. Additionally, the full-year EPS projections have been adjusted. The initial estimates for the airline’s annual earnings were $2.61 for the current year, $3.59 for the following year, and $4.47 for 2027. These figures have now been revised to $2.43 for this year, $3.04 for the next year, and $3.89 for 2027. InvestingPro data shows that 4 analysts have recently revised their earnings estimates downward, with the next earnings announcement expected on April 24, 2025.
The analysts at Citi apply an 8.8x multiple to the airline’s expected earnings, which, when recalculated with the slightly reduced 2025 EPS estimate, leads to the updated target price of $21.50 per share. The revised figures reflect Citi’s latest assessment of American Airlines’ financial trajectory in the coming years.
The price target change comes amidst a backdrop of fluctuating fuel costs and shifting revenue dynamics within the airline industry. These factors are crucial in determining the profitability and financial health of airlines.
Investors and stakeholders in American Airlines will be monitoring the company’s performance closely in light of these updated projections, as they may influence the stock’s movement in the market.
In other recent news, American Airlines has been the subject of several significant developments. Citi analysts adjusted their price target for American Airlines to $21.50 from $23.00 while maintaining a Buy rating. This revision reflects updated earnings estimates, with a first quarter 2025 EPS forecast lowered to $-0.30 and full-year estimates recalibrated for the next few years. Redburn-Atlantic upgraded American Airlines shares from Neutral to Buy, raising the price target to $24, citing positive momentum and potential financial improvements, particularly from a recent credit card agreement with Citi.
Moreover, Raymond (NSE:RYMD) James has maintained an Outperform rating on American Airlines despite the airline’s involvement in a tragic collision with a U.S. Army helicopter, which resulted in 67 casualties. The incident is under investigation, and the market is closely monitoring the situation for further details. Additionally, rising oil prices due to new tariffs have raised concerns about increased operating costs for airlines, including American Airlines. The tariffs are expected to impact fuel costs significantly, leading investors to reassess the financial outlook for the sector.
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