American Airlines (NASDAQ: AAL) stock is seeing a modest decrease in pre-market trading Monday as Evercore ISI cut its price target.
Evercore ISI has revised its outlook on American Airlines (NASDAQ: AAL) stock, lowering its price target from $13.00 to $10.00 while maintaining an In Line rating. The adjustment comes after the leading air carrier issued disappointing 2024 earnings guidance.
American Airlines has reduced its earnings per share (EPS) midpoint forecast from $2.75 to $1.00. The airline has also scaled back its free cash flow expectations, downgrading the figure from $2 billion to $500 million. However, the company has updated its full-year capacity guidance to a 5-6% increase, a slight adjustment from its earlier mid-single digits forecast.
Evercore ISI noted that it had anticipated a stronger performance from American Airlines, particularly with new commercial leadership expected to drive margin improvements. However, the latest figures indicate a challenging environment for the airline.
For the second quarter of 2024, American Airlines reported a 6% drop in unit revenue year-over-year, with a 1% increase in total unit costs. The company attributed this cost increase to an 8% increase in capacity. Fuel costs per gallon also saw a 3% increase, while non-fuel costs remained relatively flat. As a result, the pre-tax margin for the airline came in at 7%, down from 13% in the same quarter of the previous year.
In light of these developments, Evercore ISI has adjusted its EPS estimates for American Airlines, lowering projections to $1.04 for 2024 and $1.05 for 2025. This is a reduction from the earlier forecasts of $2.00 for 2024 and $1.82 for 2025.
American Airlines (NASDAQ: AAL) Stock Reaction
As of 09:23 a.m. (Eastern Time) Monday, AAL stock traded at $10.59, marking a 0.33% decrease compared to the previous trading session.
AAL AAL stock American Airlines NASDAQ: AAL
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