According to the opinion expressed by Michael Linenberg, the Deutsche Bank Analyst, the American Airlines stock is expected to outperform once the economic activities are normalized. Not only that, but he also labels the “buy rating” tag on the airline’s shares with the price target of $18 denoting that it will further rise by 60% in the next twelve months. As the rest of Wall Street is indifferent to the aforementioned claims, Linenberg has a number of theories to back his unilateral forecast.
Together with the risk of the daily cash burn rate which is estimated to decrease by double in the December quarter as compared to that of the September quarter, he confirms that the “fundamentals will continue to improve” once the transport sector and the economy gain momentum. In simpler terms, as the different sectors of the entire world are facing recession altogether, the shock of unemployment and poverty has given momentum and a bigger reason to the sufferers to come out of it as soon as they can and that the only way from here, for all, is up. The revenue recovery might be very slow, however, things will still fall under the banner of ‘revenue recovery’. So according to this theory, investing in American Airline stock might not be the worst idea.
It isn’t that Linenburg bluntly states his reasons for the ‘V-Shaped’ recovery curve of American Airlines Stock, he balances his theories with the unfortunate facts with regard to the airlines as well. He has clearly stated that the revenue recovery rate of the airline for the December quarter will contract by 65% (which is far better than that of the June and September quarter), which is far below that of the estimated percentage of the April quarter.
As mentioned earlier, the overall economy of the world and the country, in general, will only cause American Airlines Stock to come out of the slump and further participate in boosting the economic recovery of the country, which gives you yet another reason, a noble one, to go for the American Airline stock.