American Airlines stock forecast: turbulence or clear skies ahead?
American Airlines (AAL) is the world’s largest airline, according to an analysis published by Information Design. A product of a business merger between American Airlines and US Airways Group, AAL came into existence on 9 December 2013.
The American Airlines Group offers nearly 6,700 flights a day to almost 350 destinations in more than 50 countries. It’s also a founding member of the oneworld® Alliance, which was formed to offer one-stop benefits to frequent international flyers.
With lockdowns imposed worldwide to combat Covid-19 beginning 2020, American Airlines’ stock value suffered significantly. The stock closed at $10.50 on 1 May 2020, with the price falling to $8.25 during trading hours. On 1 January 2020, the stock had been at $26.84.
In alignment with the global economic recovery, American Airlines’ stock chart seemed to have gained some momentum since the peak of the global pandemic. In its Q3 2021 financial results, published on 21 October 2021, the airline reported revenues of $9bn – 20% up on Q2 2021.
However, with the recent Omicron scare and the new IHU Covid variant discovered in France, will the aviation industry slow again? Join us as we track the latest AAL stock news, and check out analysts’ comments on an American Airlines stock forecast.
Fundamental analysis
In its Q3 2021 financial results, American Airlines reported a net profit of $169m. The company has come a long way since its published losses of $2.3bn in Q3 2020.
Doug Parker, American Airlines’ CEO, remains optimistic about American Airlines stock projections, saying:
From the three categories of its primary revenue drivers of Passenger, Cargo and Other activities, the passenger division led the way, reporting $7.9bn in revenues for Q3 2021 – compared to Q3 2020 revenues of $2.5bn, there has been a considerable increase of 213.26%.
Overall operating revenue has risen by 182.66% on Q3 2020.
In the company’s Q3 2021 results report, the CEO emphasised the strong performance of the American Airlines stock market. Compared to pre-pandemic levels in 2019, the company reached 52% of domestic business revenues in June 2021. In July, with companies resuming work from offices, revenues climbed to 64% of pre-pandemic top-line numbers.
Further in AAL stock analysis, an important metric in the aviation industry is Available Seat Miles (ASM). It measures the airline's passenger carrying capacity to generate revenues. It’s calculated by multiplying the number of seats available by the number of miles flown.
Since the beginning of the pandemic, ASM for all carriers fell sharply due to the travel restrictions put in place by the government in response to Covid-19.
With the global economic recovery underway, AAL’s ASM number rose. The company reported $61.11bn for the third quarter of 2021 – compared to the Q3 2020 result of $30.76bn. The ASM has risen by 98.6%.
The total cost for ASM for Q3 2021 was $13.70. The total revenue for ASM was $14.68, whereas for Q3 2020 the revenue stood at $10.31 and costs were at $19.64.
Latest AAL stock news
The American Airlines stock performance had an upbeat close to Q2 2021, having recorded its highest close price of $25.82 for the year, on 2 June 2021. Moving into the third quarter, American Airlines discovered innovative ways to attract customers. As of 2 August 2021, the company announced the addition of TikTok to its roster of free in-flight entertainment.
A massive hit with GenZ and millennials, TikTok is a video-focused, social networking service owned by Byte Dance, a Chinese company. From 65 million annual users in 2017, this short-form video application has grown its market to 1 billion in 2021.
Armed with the fastest WiFi service of all US carriers, passengers can have 30 minutes of free access to TikTok on all American Airlines single-aisle carriers equipped with Viasat Wifi.
Clarissa Sebastian, Managing Director of Premium Customer Experience and Onboard Products at American Airlines emphasised on the brand’s commitment to customer satisfaction. She said:
With the Omicron variant of Covid-19 at large during December 2021, American Airlines stock expectation was adversely affected.
Compared to the close price of $22.26 (9 November 2021) in Q4 2021, American Airlines stock closed at $16.28 (26.86% lower) on 1 December 2021. The company’s air carriers remained busy during the end of year break – reportedly, 5,000 daily flights still ran between 19 December and 1 January.
At the time of writing (10 January 2022), AAL stock closed at $19.28. Compared to the AAL historical price of $15 on 11 January 2021, the stock is trading at 28.53% on the upside.
Analyst prediction and forecasts
With its impressive Q3 2021 revenues of $9bn, American Airlines exceeded equity analysts’ consensus of $8.92bn, according to Zacks. The company is set to report its full year 2021 and Q4 2021 results on 27 January 2022. Equity analysts expect sales within the range of $8.90bn to $9.19bn.
The algorithm-based forecasting service Wallet Investor, which usually provides 5-year price targets for stocks, does not offer an AAL stock forecast beyond December 2024. According to its forecast, the AAL price could drop to as low as $0.0149 by March 2024. This restricts a credible AAL share price forecast (2025-2030).
According to the data compiled by MarketBeat, on 11 January 2022, eight analysts recommended to ‘hold’ AAL stock, five recommended a ‘buy’ and four suggested a ‘sell’. The AAL share price target of these 17 analysts ranges between $18 to $29, at an average of $21.75. This consensus forecast is upwards of 11.35% from its current close of $19.28.
On 22 December 2021, Zacks Investment Research changed its rating from ‘hold’ to ‘sell’, and set a target price of $19. Citigroup decreased its AAL stock price target from $21.50 to $20.50 and set a ‘neutral’ rating, as of 26 October 2021. And on 6 October 2021, Goldman Sachs dropped their target price from $19 to $18, downgrading the stock from ‘neutral’ to ‘sell’.
When looking at American Airlines’ future stock price, it’s important to bear in mind that analysts’ forecasts and price targets can be wrong. Analysts’ American Airlines stock price predictions are based on making fundamental and technical studies of the stock’s performance. Past performance is no guarantee of future results.
FAQs
Will American Airlines shares go up/down?
Based on 17 analysts’ views compiled by Market Beat, American Airlines share price forecasts vary from a low of $18 to a high of $29, with the average price targets sitting at $21.75. At the time of writing (10 January 2022), the stock price is 19.28.
Note that predictions can be wrong. Forecasts shouldn’t be used as a substitute for your research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.
Is American Airlines a good investment?
Whether American Airlines stock is a suitable investment depends on your investment objectives and opinion based on your own research. Remember, it’s important to reach your own conclusion of the company’s prospects and the likelihood of achieving analysts’ targets. You need to carry out your own analysis.
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