American Airlines (AAL) stock is selling off Thursday as the air carrier's weak outlooks for the first quarter and full year offset its top- and bottom-line fourth-quarter beats.
In the three months ending December 31, American Airlines' revenue increased 4.6% year over year to $13.7 billion. Its earnings per share (EPS) nearly tripled from the year-ago period to 86 cents.
"The American Airlines team achieved a number of important objectives in 2024," said CEO Robert Isom in a statement. "We continue to run a reliable operation, and we are reengineering the business to build an even more efficient airline. That, coupled with our commercial actions, resulted in strong financial performance in the fourth quarter."
American Airlines' results beat analysts' expectations. Specifically, Wall Street was anticipating revenue of $13.4 billion and earnings of 64 cents per share, according to CNBC.
However, the positive sentiment around the earnings beat faded when AAL provided its outlook. Here's what the company expects to achieve:
Analysts were anticipating a loss of just 4 cents per share in the first quarter and earnings of $2.42 per share for the full fiscal year, according to MarketWatch.
Is American Airlines stock a buy, sell or hold?
Heading into Thursday's session, American Airlines was up 37% year over year, outpacing the S&P 500's 27% total return (price change plus dividends). And analysts are generally bullish on the industrial stock.
According to S&P Global Market Intelligence, the average analyst target price for AAL stock is $20.24, representing an upside of nearly 15% to current levels. Additionally, the consensus recommendation is a Buy.
Financial services firm Jefferies is one of those with a Buy rating on the large-cap stock, along with a $20 price target.
"AAL's strategy concentrates on its short-haul network, comprising 75% of available seat miles (ASMs), with focus on the medium and small markets that can be ideally served by its regional fleet and its pilot scope clause," wrote Jefferies analyst Sheila Kahyaoglu in a January 6 note.
The analyst notes that these markets "offer connectivity to AAL's domestic Sun Belt hubs and enable the international network," which contrasts to America Airlines' network peer strategies that focus on large, coastal hubs.
Kahyaoglu adds that "ongoing corporate share recapture, lower capacity and capital expenditures, and a new credit card deal mean AAL could see significant surprise to the upside in 2025."
