American Airlines Group was upgraded to buy from neutral at UBS on expectations that passenger revenue will increase on an improving balance between supply and demand during the first half of 2016. Still, the bank lowered the company’s price target to $46 from $48 based on a valuation multiple that the bank said “remains down near historical trough level.” Analysts said American Airlines will be one of the biggest beneficiaries of slower industry capacity growth. Travel demand will remain largely stable while the decelerating growth in the number of seats available where American flies will be high. The airline has been underperforming the industry on passenger revenue, with a market forecast of a 5% to 7% first-quarter decline at American, UBS wrote in a Wednesday note. American announces fourth-quarter 2015 earnings on Jan. 29 and first-quarter 2016 earnings on Apr. 22. UBS expects passenger revenue to decline in the 3% to 5% range in the first quarter and improve in the second quarter. Shares are up 0.8% in morning trading, but down 24.2% for the past 12 months. The S&P 500 is down 6.6% for the same period.
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