Citi Raises Price Target for American Airlines

Investing.com — Citi has increased its price target for American Airlines Group (NASDAQ:AAL) from $19 to $23, placing it on its ‘focus list’ due to anticipated earnings surprises that could drive significant share price upside.

Citi's note highlights that, while Delta and United have outperformed in post-pandemic earnings recovery and share performance, American Airlines possesses the necessary tools to follow suit.

The brokerage emphasizes the positive impact of a recent credit card agreement with Citigroup (NYSE:C), which is expected to be a substantial tailwind for American. Such partnerships typically provide airlines with additional income and working capital as card issuers pay for mileage credits linked to card usage.

Citi also observed a strong correlation between American's supplementary income and pre-tax earnings, indicating that the credit card deal could enhance the airline's profitability.

Despite American Airlines’ stock rising by 28% this year, it has underperformed compared to peers like United and Delta, suggesting that stronger earnings revisions are still not fully accounted for. Shares of American Airlines were up approximately 1% at $17.8 in premarket trading.