BMO Capital has increased its 12-month price target for American Airlines (NASDAQ:AAL) to $17.00 from $16.75, while leaving its Market Perform rating intact. At the time of the note, the stock was trading near $13.70, implying roughly a 24% upside to BMO’s target; however, InvestingPro data noted the shares have fallen by more than 10% over the last week.
The change in BMO’s outlook follows American Airlines’ guidance for 2026 adjusted earnings per share in a range of $1.70 to $2.70. BMO said that guidance sits about 12% above pre-earnings consensus estimates and supports the carrier’s efforts to continue reducing leverage. The airline’s sizeable reported total debt - $36 billion in recent quarters - remains central to investor focus.
BMO Capital analyst Michael Goldie raised his 2026 EPS forecast for the company to $2.16 from $1.83, reflecting greater confidence in the outlook for the coming year. The research note emphasized that management sees a pathway to the upper end of its guidance range if January demand momentum carries forward into the year.
Alongside the positive aspects of the guidance, BMO highlighted competitive dynamics in the Chicago market, where American and United Airlines are vying for share. The firm flagged this competitive environment as a point of investor attention because of potential fare compression risk should market share battles intensify.
Recent quarterly results provide a mixed backdrop. American reported adjusted earnings per share of $0.16 for the fourth quarter of 2025, a result well below analyst expectations, which ranged from $0.34 to $0.38 according to notes from Bernstein, SocGen Group and other analysts. Revenue for the quarter totaled $14.0 billion, slightly under the consensus projection of $14.04 billion.
The company said a government shutdown had an adverse effect on its top line, reducing revenue by $325 million in the quarter. American also reported a 2.5% year-over-year decline in domestic passenger revenue per available seat mile, while unit revenue decreased by 2% overall and total unit costs rose 4% year-over-year. Pre-tax margin declined to 1% in the quarter, down from 6% in the same period a year earlier.
Following the earnings release, Evercore ISI maintained an In Line rating on American with a $17.00 price target.
In summary, BMO’s modest increase to its price target and higher 2026 EPS estimate reflect optimism tied to the airline’s forward guidance and potential for debt reduction, contingent on sustaining demand momentum. At the same time, recent earnings shortfalls, cost pressure, and regional market competition are immediate considerations for investors evaluating the carrier’s near-term performance.