NEW YORK (TheStreet) -- Shares of American Airlines (AAL) - Get American Airlines Group, Inc. Report were down in late-afternoon trade on Friday as Imperial Capital initiated coverage of the stock with an "in-line" rating and $90 price target in a note cited by Barron's.
Imperial said that the Forth Worth, TX-based company will soon face challenges from Britain's decision to exit the EU, terrorism, Zika virus fears and continuing revenue per available seat mile (RASM) pressures.
The firm added that although American has "strong" operating cash flows, it also has an "aggressive" CAPEX program financed by low cost debt. This could limit free cash flow yields, Barron's reports.
But Imperial pointed out that American recently executed "one of the most under-appreciated management achievements in recent years" by reporting record net profit and pretax margins while integrating of American and U.S. Airways.
"The good news is that American Airlines is expected to have the youngest fleet among the Big 3 by 2017 - 9.6 years for American Airlines vs. 14.9 years for United Continental (UAL) and 16.3 years for Delta (DAL)," Imperial said.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rated this stock as a "hold" with a ratings score of C-.
Among the primary strengths of the company is its respectable return on equity which we feel is likely to continue. At the same time, however, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and poor profit margins.
You can view the full analysis from the report here: AAL