Author: Shivansh Tiwary
(Reuters) – Shares of American Airlines (NASDAQ: ) are poised for a strong 2025 as the carrier emerges from a challenging year, according to brokerages Jefferies and TD Cowen, which upgraded the stock to a “buy” rating on Monday.
The carrier’s shares rose nearly 5% to $17.76 in premarket trading.
The carrier spent much of 2024 revamping its sales strategy and repairing relationships with corporate clients after a sales and distribution approach backfired.
American has implemented a strategy focused on renegotiating contracts with corporate travel agencies and clients, reducing benefits and discounts, which it has been aggressively pushing since April 2023.
This approach resulted in an exodus of corporate clients last year, which negatively affected the airline’s revenues. American has lagged well behind its network rivals United Airlines and Delta Air Lines (NYSE: ), the other members of the “Big 3” network carriers.
“In retrospect, we were premature with our upgrade a year ago, and then failed to appreciate the transitory nature of their headwinds when we downgraded the stock in July,” TD Cowen’s Tom Fitzgerald wrote in a note.
The brokerage raised its price target on the stock to $25 from $17 and said the legacy carrier is expected to benefit from improving domestic prices and the return of its corporate clients.
American has since regained market share while also enjoying the benefits of an improved pricing environment.
Last month, the Fort Worth, Texas-based airline raised its fourth-quarter profit forecast, signaling a strong start to the holiday travel season.
With ongoing corporate share buybacks, reduced capacity and capital spending, American Airlines could experience significant growth in 2025, Jefferies analysts wrote in a note.
The brokerage raised its price target on the stock to $20 from $12, as it welcomed the carrier back into the “Big 3.”
The airline’s stock is rated “buy” or higher by 10 brokerages, with 12 “hold” and one “sell.”
