Airline Giant Moves Higher Amid Mixed Analyst Notes

Now may be the right time to weigh in on AAL's next move with options

Digital Content Manager
Apr 23, 2021 at 11:02 AM
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The shares of American Airlines Group Inc (NASDAQ:AAL) are up 3.2% to trade at $20.72 this morning, after the security received an upgrade from Raymond James to "market perform" from "underperform." The firm highlighted the airliner's risk-reward profile, which has become more balanced since the latest market selloff. Meanwhile, both J.P. Morgan Securities and Stifel cut their price objectives to $14 and $19, respectively. 

Though the security has been descending from a March 18, annual high of $26.09, the supportive 80-day moving average has recently stepped in as a landing pad, containing this pullback. American Airlines stock is now attempting to overcome overhead pressure at the $21.50 mark, and sports an impressive 103.4% year-over-year lead.

Analysts were pessimistic towards the equity coming into today, with 12 of the 13 in question carrying a tepid "hold" or worse rating, while only one said "strong buy." Plus, the 12-month consensus price target of $17.69 is a 15.2% discount to current levels.

A short squeeze could create additional tailwinds for American Airlines stock going forward. Short interest added 6.7% in the most recent reporting period, and the 78.77 million shares sold short make up a whopping 17.7% of the security's available float.

Lastly, now could be the right opportunity to weigh in on AAL's next move with options. The security's Schaeffer's Volatility Index (SVI) of 46% sits at the bottom percentile of its annual range. To put it simply, the equity currently sports affordably priced premiums.

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