American Airlines Group Inc (AAL) — The 2013 merger between American Airlines and U.S. Airways created the world’s largest airline. Along with wholly owned and third-party regional carriers US Airways Express and American Eagle, the airlines operate an average of approximately 6,700 daily flights to 339 destinations in 54 countries.
Credit Suisse’s Equity Research has an “outperform” rating on AAL stock. In early December, its analysts raised their estimates and price target based on jet fuel price assumptions. They increased their target by $3 to $58, which is 12% above current prices.
Consensus earnings estimates have steadily increased as oil prices have fallen. Analysts now expect 96% EPS growth in 2014 to $5.72 and 51% growth in 2015 to $8.65. These estimates may continue to be revised upward if crude prices decline further.
AAL stock rallied last week when an arbitration panel imposed a joint contract on the company’s 24,000 flight attendants after negotiations between their union and the company failed. This removed a major hurdle in the integration process.
In mid-November, AAL stock broke a primary resistance (now support) line at $44.50 from a well-defined bullish “V” formation. The breakout was accompanied by a golden cross (long-term bullish signal) and two breakaway gaps, which have since been closed by a new mini “V” consolidation with secondary resistance at $51.50.
The primary resistance had been built over an eight-month period. Therefore, its break is considered a major technical event since it was accompanied by heavy accumulation. On Friday, the stock rose through the secondary resistance line with a trading target of $58.
Buy AAL stock under $52 with a stop-loss order at $46.
