Goldman Sachs Downgrades American Airlines (AAL) to Neutral

Earlier, Goldman Sachs downgraded American Airlines (NASDAQ: AAL) from Buy to Neutral with a price target of $44.00 (from $48.00). The downgrade comes as they see greater upside potential elsewhere within their coverage universe. They note note, however, that shares of AAL are trading at an undemanding valuations of just 6.0x 2016E P/E.

"We think the stock will gradually re-rate and trade higher over the long-term, well beyond our six-month valuation time horizon," analyst Tom Kim said. "The company is generating strong operating margins and robust operating cash flows. It has a solid balance sheet and is defensively positioned in the event of an unexpected demand shock, as AAL retains $10bn in cash and cash equivalents. We are mindful of three key risks: (1) Comparatively high exposure to LatAm (17%); (2) Competitive capacity pressure, particularly in Dallas; and (3) Major integration initiatives, including its reservation system."

For an analyst ratings summary and ratings history on American Airlines click here. For more ratings news on American Airlines click here.

Shares of American Airlines closed at $39.18 yesterday.

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