American Airlines stock skyrockets after fourth quarter results but ‘falls apart with fundamentals’, analyst says



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Shares of American Airlines Group Inc. climbed to an 11-month high on Thursday after the airline reported better-than-expected quarterly results, but Cowen analyst Helane Becker warned prices were “falling apart fundamentals ”.

AAL stock
surged 43.4% in pre-market trading, setting them on track to open at the highest price seen during regular session hours since February 25. June 4.

Trading volume climbed to 64.2 million shares less than an hour before the opening, which is already above the full-day average over the past 30 days of around 53.7 million actions.

“We believe this move is due to the ongoing risk reduction in the market and American remains one of the most consensual short-term airlines in our coverage (~ 25% short-term interest as of 01/15 / 21), “Becker wrote in a note to customers. “

Becker refers to the trading momentum that appears to have contributed to a short squeeze in stocks with a high number of short interests, or bets on falling prices, like GameStop Corp. GME
and AMC Entertainment Holdings Inc. AMC

Don’t miss: It’s Not Just GameStop: Here are some of the other heavily shorted titles that are on the rise.

American reported earlier that it fell to a fourth quarter net loss of $ 2.18 billion, or $ 3.81 per share, on net income of $ 414 million, or 95 cents per share, in the during the period of the previous year. Excluding non-recurring items, the adjusted loss per share was $ 3.86, beating the FactSet loss consensus of $ 4.11.

Revenue fell 64% to $ 4.03 billion, but beat the FactSet consensus by $ 3.88 billion. The load factor fell from 84.7% to 63.4%, but exceeded expectations by 62.9%.

“As we look to the year ahead, 2021 will be a year of recovery,” said CEO Doug Parker. “While we don’t know exactly when passenger demand will return, as vaccine distribution takes place and travel restrictions are lifted, we will be ready.

Cowen’s Becker said she doesn’t believe the stock rally is fundamentally motivated because the US outlook – “sequentially stable to slightly worse” – is similar to her peers who have previously reported it. (Learn more about JetBlue Airways Corp. JBLU
and Southwest Airlines Co. LUV
results, also released Thursday.)

“It’s hard to say when the market will look at the fundamentals of the company, but we think Americans might take this opportunity to deleverage the balance sheet with a stock offering,” Becker wrote.

US stock has risen 51.2% in the past three months to Wednesday, but has fallen 38.4% in the past 12 months. In comparison, the S&P 500 SPX index
has gained 14.7% in the past three months and 14.5% in the past year.

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