Goldman Sachs Starts American Airlines (AAL) at Buy, Sees 26% Upside
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Goldman Sachs initiates coverage on American Airlines (NASDAQ: AAL) with a Buy rating and a price target of $46, suggesting 26% upside.
Analyst Tom Kim said, "In our view, the stock should outperform our airline coverage and the S&P500. The carrier’s margins are poised to expand 2.0 ppts over 2013-16E to 12.7%, which we expect to drive multiple expansion. Meanwhile, earnings growth should accelerate thanks to a favorable airline cycle, which we expect to facilitate AAL's integration initiatives more than the market anticipates. Consensus upgrades should catalyze near-term share performance while margin growth drives multiple expansion, in our view."
While consensus estimates have risen 36.5% for FY 2014 and 30.8% for 2015 over the past three months, the firm still sees upside risk to the consensus. The firm's estimates are 6.7% above the Street for 2014 and 11.5% above for 2015.
Shares of American Airlines closed at $36.56 yesterday.
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