Imperial Capital Raises Price Target on American Airlines (AAL) Following 3Q EPS Beat
Imperial Capital reiterated an In-Line rating on American Airlines (NASDAQ: AAL), and raised the price target to $43.00 (from $40.00), following the company's 3Q earnings report. AAL reported EPS of $1.76, versus estimates of $1.65. The beat was driven by a better than anticipated RASM which declined 2.2% versus expectations for a decline of 4.0%. AAL expects November 2016 to January 2017 domestic RASM to be flat to modestly higher based on current booking trends, confirming commentary by its Big 3 peers.
Analyst Michael Derchin commented, "We are maintaining our In-Line rating and lowering our estimates on higher labor and fuel costs, but increasing our one-year price target on AAL shares to $43 from $40 on higher valuations due to improving unit revenue trends. We now estimate FY17 RASM will increase by 1.0% versus a decline of 1.0% previously. Our price target is about 6% above the recent share price. We are lowering our 4Q16 EPS estimate to $0.63 from $0.85, our FY16 estimate to $5.47 from $5.55, our FY17 EPS estimate to $4.78 from $4.90, and our FY18 estimate to $5.42 from $5.47."
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Shares of American Airlines closed at $40.59 yesterday.