American Airlines Group Inc. shares soared toward an 11-month high on Thursday after the airline reported better-than-expected quarterly results, but Cowen analyst Helane Becker warned that prices were “moving away from the fundamentals”.
The AAL stock
skyrocketed 43.4% in pre-market trading, putting them on track to open at the highest price seen during normal session hours since 25 February. It was also headed for a record gain of one day, as the previous record was the 41.1% increase on June 4.
Turnover reached 64.2 million shares less than an hour before opening, which is already more than the whole day’s average over the past 30 days of about 53.7 million shares.
“We believe that the change is due to the reduction of risk in the market and American continues to be one of the most consensual short-term airlines in our coverage (~ 25% of interest on short on 1/15/21)”, he wrote Becker in a note to customers. “
Becker is referring to trading dynamics that appear to have contributed to a tightening of stocks with a large number of short interest, or bets that prices will fall, 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 sold shares.
American previously reported that it fluctuated to a net loss of $ 2.18 billion in the fourth quarter, or $ 3.81 per share, from a net profit of $ 414 million, or 95 cents per share, over the year. previous. Excluding non-recurring items, adjusted loss per share was $ 3.86, exceeding FactSet’s loss consensus of $ 4.11.
Revenue fell 64% to $ 4.03 billion, but surpassed FactSet’s consensus of $ 3.88 billion. The occupancy rate fell from 84.7% to 63.4%, but exceeded expectations of 62.9%.
“Looking ahead to next year, 2021 will be a year of recovery,” said Chief Executive Doug Parker. “Although we don’t know exactly when passenger demand will return, as vaccine distribution is established and travel restrictions are lifted, we will be ready.
Becker, of Cowen, said he did not believe that the bullish stock price was fundamentally boosted, as American’s outlook – “sequentially flat to slightly worse” – is similar to that of its peers who have reported. (Read more about JetBlue Airways Corp. JBLU
and Southwest Airlines Co. LUV
results, also released on Thursday.)
“It is difficult to say when the market will look at the fundamentals of the company, but we believe that American could take this opportunity to de-leverage the balance sheet with a stock offering,” wrote Becker.
American’s shares rose 51.2% in the last three months through Wednesday, but have fallen 38.4% in the last 12 months. In comparison, the S&P 500 SPX index
gained 14.7% in the last three months and recovered 14.5% last year.