NEW YORK (TheStreet) -- Shares of American Airlines Group (AAL) are sliding, down 3.14% to $49.70 in early market trading Tuesday, after the airline was downgraded to "market perform" from "outperform" by analysts at Cowen this morning.
Cowen analysts said the company will likely face increased competition in key markets.
Still the firm set a price target of $66 on shares of American Airlines, up from its previous $55 target.
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There have been reports of their interest in the Japanese budget carrier, as U.S. companies are increasingly competing for passengers between East Asia and the U.S., Reuters added.
A previous report by the Nikkei Asian Review said that American Airlines planned to send executives to Japan to discuss investment in Skymark.
Fort Worth, TX-based American Airlines provides scheduled jet service to approximately 160 destinations throughout North America, the Caribbean, Latin America, Europe and Asia.
Separately, TheStreet Ratings team rates AMERICAN AIRLINES GROUP INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMERICAN AIRLINES GROUP INC (AAL) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its notable return on equity, robust revenue growth and solid stock price performance. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to other companies in the Airlines industry and the overall market, AMERICAN AIRLINES GROUP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The revenue growth came in higher than the industry average of 22.9%. Since the same quarter one year prior, revenues rose by 38.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 109.46% and other important driving factors, this stock has surged by 43.91% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Airlines industry. The net income increased by 129.8% when compared to the same quarter one year prior, rising from -$2,001.00 million to $597.00 million.
- The debt-to-equity ratio is very high at 8.87 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, AAL maintains a poor quick ratio of 0.73, which illustrates the inability to avoid short-term cash problems.
- You can view the full analysis from the report here: AAL Ratings Report