Shares of American Airlines (AAL) - Get Report glided higher on Monday after the airline received an upgrade from Deutsche Bank - even after the carrier lowered its forward per-share guidance for the remainder of 2019.
Deutsche Bank analyst Michael Linenberg upgraded American Airlines to buy from hold with a 12-month price target of $40 on expectations that the airline is appropriately resetting analysts' and investors' expectations in the wake of the grounding of its Boeing (BA) - Get Report MAX 8 jets.
"We think the resetting of expectations by management essentially establishes a 'floor' for AAL's share price and provides the company a bit more 'cushion' around its earnings targets," Linenberg said in a note to clients, adding that he sees last week's guidance reduction as the "final cut."
The Fort Worth-Texas based airline on Friday reported first-quarter profit above forecasts but lowered its full-year per-share earnings guidance to between $4 and $6 as it continues to struggle with cancellations and costs related to the mandatory grounding of Boeing MAX 8 jets.
American said it canceled approximately 1,200 flights in the first quarter, and that it also has removed all 737 MAX flying from its flight schedule through August 19 - roughly 115 flights per day.
Meantime, Boeing received more bad news on Monday after the U.S. Federal Aviation Commission said it would impose new safety checks on the planemaker's 787 series of aircraft.
Shares of American Airlines were up about 2% at $33.71 in trading on the New York Stock Exchange.