American Airlines Group Inc (Nasdaq: AAL) is trading 5.0% up this morning after a JPMorgan analyst turned super bullish on the air carrier.

American Airlines stock is a steal right now

On Monday, Jamie Baker upgraded the airline holding company to “overweight” and raised his price target to $29 – more than a 100% upside from here.

The analyst likes American Airlines stock for the management’s commitment to reducing debt. His research note reads:

American Airlines is now 60% of its way to reducing its total debt by $15 billion by the end of 2025. The pace of improvement is commendable and ahead of our expectations.

Baker is bullish on the airline stock particularly because it’s trading at a deep discount. “AAL” is currently down nearly 15% versus its year-to-date high.

American Airlines issued upbeat guidance

Last month, American Airlines reported roughly in line results for its first financial quarter and issued upbeat guidance for the future.

Moving forward, the JPMorgan analyst expects this airline stock to continue to benefit on the back of strong international demand that’s helped the big three airlines outperform their discount peers year-to-date.

 

Granted, lower costs help, but we believe it’s a fallacy that cost advantages somehow immunize low-fare airlines from aggressive competition, particularly given the advent of basic economy.

American Airlines stock will also benefit as Boeing and Airbus overcome challenges and commit to timely deliveries. On the flip side, Jamie Baker downgraded Southwest Airlines to “neutral” on Monday.

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