UPDATE: Morgan Stanley Upgrades American Airlines (AAL) to Equalweight

Morgan Stanley analyst Ravi Shanker upgraded American Airlines (NASDAQ: AAL) from Underweight to Equalweight with a price target of $21.00 (from $23.00).

The analyst comments "We are upgrading AAL from UW to EW as the stock's sell-off together with the rest of the group has now made risk-reward more balanced. We are cutting our PT to $21 from $23, which implies ~10% upside to the current stock pice. Our new PT implies 7xFY23e PE and 6xFY24x PE, consistent with the LT average, though much like its Legacy peers, one could argue for a higher multiple given the deleveraging potential over time. AAL arguably has the highest deleveraging potential of any airline by mid-decade though this could also be a show-me story in the near term. We expect AAL to be a strong beneficiary of the rising tide in 2022esp. in International and corporate though its Asia exposure means that the tailwind is likely to be the last to show up (but is likely to see significant pent up demand when it does). Mgmt. is also sounding better on near-term costs compared to some of its large peers and if it can keep 2022 CASMxFto LSD-MSD above 2019 levels, this could drive upside to numbers."

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 $18.79 yesterday.

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