Goldman Sachs Starts American Airlines (AAL) at Buy, Sees 26% Upside

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.

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 $36.56 yesterday.

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