Investing.com — Bank of America analysts adjusted their outlook on several airline stocks, highlighting a divergence in performance between network carriers and domestic airlines.
Analysts upgraded American Airlines (NASDAQ:) from underperform to neutral, citing benefits from strong award revenue, a rebound in business travel and growth in Atlantic routes.
“AAL should benefit from the strong trends discussed by DAL last week,” they noted, referring to Delta Air Lines’ (NYSE:) recent positive earnings report.
In contrast, BofA downgraded Southwest Airlines (NYSE:) and JetBlue Airways (NASDAQ:) from neutral to underperform.
The bank explained that these airlines are “less exposed to business, premium and international routes” and face execution risks as they expand their product offerings and refine their networks.
BofA lowered LUV’s price target from $33 to $31 and kept JBLU’s at $6.50.
United Airlines was named a top pick, with BofA saying it is well-positioned to capitalize on favorable trends in premium and business travel, as well as growth on Atlantic routes. The rating suggests that these factors could help UAL outperform in coming quarters.
Analysts have also expressed concerns about the impact of rising jet fuel prices, which have risen 8% since the start of the year, putting pressure on short-term profits at airlines like Air Alaska (NYSE:) Group, JBLU and LUV.
“Our EPS estimates are below 1Q25 consensus for ALK (Alaska Air Group), JBLU, LUV and ULCC (Frontier Airlines) given recent fuel moves, while LUV and JBLU have tougher revenue comparisons of 100 at 150 basis points taking into account the Easter change,” BofA said.
