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American Airlines upgraded to Buy at Citi

Analysts at Citi upgraded American Airlines (AAL) shares to Buy from Neutral while increasing their price target to $20 from $14. The analysts say the airline's "solid demand for premium cabin offerings" and its diversified revenue streams give it "superior positioning."

Yahoo Finance's Madison Mills breaks down the call.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Stephanie Mikulich

Video Transcript

SEANA SMITH: It's time for our stock to watch. We're taking a look at American Airlines. Citi, the latest company to upgrade American Airlines from neutral to buy, hiking its price target to $20 a share. Yahoo Finance's Madison Mills on the floor of the New York Stock Exchange with more and. Maddie, why do you think Wall Street's turning a bit more bullish on American?

MADISON MILLS: Well it's all about a diversified revenue stream for American Airlines as well as an increase in demand for its pricier tickets. Now, analysts that I've been speaking with since, really, the COVID slowdown that we saw really hitting the airline industry have been saying that the area to watch for recovery would be those first class tickets, which are really heavily impacted by business travel, which we've obviously seen a big slowdown in.

If you're putting your air ticket on the company card, you're more likely to level up to first class. And that's exactly what we're seeing with American Airlines. This came, by the way, this upgrade after a huge beat on their top and bottom lines when it came to their earnings report last week.

Now, I should say that we're still-- if I look at the Yahoo Finance platform, we're at about a 38% hold on American Airlines, but still increasingly seeing some more buys on this name. And that might be why we're seeing a little bit of green on the screen for American Airlines this morning. They're up about 1.6%. And this story for them is going to be critical, given some of the challenges that we've seen in the broader airline space.

Ryanair this morning reporting some mixed results, saying that the demand picture is not going to be as strong for them. They're also saying that they're happy to pick up any Boeing aircrafts that other airlines are sloughing off. All of these names are in the green this morning, so seeing a little bit of recovery across the airline space after the past couple of weeks of volatility in the airlines ticker space.