An improving industry backdrop and a new credit card deal has Bernstein enthusiastic about American Airlines . The firm upgraded the airline to outperform from market perform and raised its price target to $24 from $14. The new price target implies shares can rally nearly 40% from Monday’s close. Analyst David Vernon said positive pricing and revenue trends across the industry are reflected in American Airlines’ fourth-quarter earnings guidance. The company in October said it sees an adjusted profit per share between 25 cents and 50 cents. For the year, American Airlines expects to earn as much as $1.60 a share on an adjusted basis, exceeding analyst expectations. AAL YTD mountain AAL in 2024 “American Airlines [is] closer to a have than a have-not,” Vernon wrote in a Monday note. “AAL’s ability to deleverage thanks to improving industry backdrop [and] new exclusive co-branded credit card deal enhances company outlook.” Additionally, the company’s co-branded credit card partnership with Citi is set to take effect in January 2026. Vernon forecasts remunerations from this card and the airlines’ other partners to rise 10% annually. “The notable boost of this steady revenue stream helps us look past the corporate [and] agency rev recovery that’s dragging out through end of ’25,” Vernon said. “Looking further out, the benefits of such a sizable, consistent cash flow (terminal value est. ~$12B) changes the story for an airline critiqued for its high leverage AAL’s ability to more easily pay down its debts enhances the company’s outlook,” Vernon wrote. Shares rose 1.3% Tuesday before the bell. The stock has gained 24.9% year to date. Analyst sentiment around the stock is tepid. Of the 23 who cover American Airlines, 15 rate it as a hold, while seven have buy or strong buy ratings, per LSEG. One analysts rates the stock as underperform.
Bernstein upgrades American Airlines, says stock can surge nearly 40%