Jefferies downgraded American Airlines (AAL) from a Buy to a Hold rating as the stock continues to take a hit due to the operator’s full-year guidance cut and the announced departure of Chief Commercial Officer Vasu Raja. On the other hand, Jefferies analysts also upgraded United Airlines (UAL) to Buy from Hold on its international travel strengths.
Yahoo Finance’s Julie Hyman and Josh Lipton examine Jefferies’ latest calls on the two major airline operators.
For more expert insight and the latest market action, click here to watch this full episode of Market Domination.
This post was written by Luke Carberry Mogan.
Video Transcript
Let’s get some more calls of the day on Airlines.
We’re gonna start with American Airlines.
Jeffrey’s downgrading that stock from buy to hold.
So they say here Julie, not all sunshine and rainbows in the sun belt in El Paso.
That’s the title of the note.
They say guidance held on as long as it could.
But it’s clear they told stra uh clients the strategy here is gonna take some time to execute, especially in light.
They say this 18% Q 2 eps cut the departure of the Chief Commercial Officer.
Of course, they made news today cutting profit and revenue expectations.
Yeah, and getting rid of that chief Commercial Officer.
I mean, basically, it seems like one of the missteps that the company made was getting rid of the middle man.
In other words, not working through booking agencies and kind of going straight to customers and it seems that that cost them.
And so um that was one of the big things that that folks were pointing the finger at when they were talking about this.
So they seem to be making uh that shift.
Now, um by the way, Jeffreys also upgraded United Airlines to buy here, talking about durable free cash flow at the company and also that it’s international business has been really strong according to the analyst there.
And now that is sort of gonna gonna be now transferred potentially to more success domestically as well as well, kind of duplicating the strategy.
Yeah, they do like united, they take the target to 65.
They told their clients listen, they see this pathway to higher margins.
They talk about a shareholder friendly management team, they like that and then they put out some catalysts.
They see ahead domestic share gains in base economy and premium.
By its way, this coming to carry maintain Q two adjusted EPS forecast, reiterated guidance.
They still see 375 to 425.
Yes.
So obviously very different stories for those two airlines today.
