What Happened?
Shares of global airline American Airlines (NASDAQ: AAL) fell 3.5% in the morning session after the investment firm Raymond James downgraded the stock to 'Market Perform' from 'Outperform', citing valuation concerns.
The investment firm's analyst, Savanthi Syth, noted that the downgrade reflects a more balanced risk/reward profile as American's stock approaches the firm's prior $14 price target. Raymond James did not issue a new price target alongside the rating change. The firm also indicated a more favorable view of competitor Alaska Air, citing more positive competitive trends for the rival airline.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy American Airlines? Access our full analysis report here, it’s free.
What Is The Market Telling Us
American Airlines’s shares are very volatile and have had 22 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock gained 7.4% on the news that the broader market rallied on strong hopes for future interest rate cuts. The broader market soared after the head of the U.S. Federal Reserve hinted that interest rate cuts could be forthcoming. This news sparked hopes that easier monetary policy could encourage more household spending, which would directly benefit the travel sector. In line with this sentiment, other travel companies also saw significant gains, with Delta Air Lines climbing 6.6%.
American Airlines is down 23.3% since the beginning of the year, and at $13.04 per share, it is trading 30.1% below its 52-week high of $18.66 from January 2025. Investors who bought $1,000 worth of American Airlines’s shares 5 years ago would now be looking at an investment worth $992.18.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
