Raymond James upgrades Alaska Air, cuts American Airlines on valuation concerns

Investing.com -- Raymond James upgraded Alaska Air Group to Outperform from Market Perform, while downgrading American Airlines to Market Perform from Outperform, citing valuation differences and competitive capacity trends.

The firm introduced a $70 price target for Alaska.

“We are upgrading ALK from Market Perform to Outperform and introducing a $70 target price as current demand and competitive capacity trends increase the conviction in our earnings forecasts and, in turn, attractiveness of the risk-reward,” Raymond James analysts said.

While the firm noted concerns about Alaska’s wider exposure to long-haul aircraft, it highlighted “a greater appreciation of Alaska’s measured approach to taking on this risk.”

Conversely, Raymond James downgraded American Airlines, saying “we are downgrading AAL from Outperform to Market Perform on more balanced risk-reward as the stock approaches our prior $14 target price.”

The analysts flagged the potential industry impact from Spirit Airlines’ financial struggles, noting that “Alaska in 2H25 is already a greater beneficiary of struggles at Spirit.”

Spirit, which recently added “going concern” language to its filings, faces significant liquidity pressure and “needs further asset sales (or partner concessions) to sustain beyond early December,” Raymond James said.

On demand trends, the firm pointed to consistent commentary of U.S. demand stabilization since April and recovery since late June/early July, with momentum in both leisure and corporate travel.

It added that commentary at September industry conferences will provide “greater insights into post-summer business demand trends.”

Raymond James also highlighted “favorable competitive trends at Alaska, including reduction in exposure to Spirit+Frontier routes,” which it said strengthens the airline’s positioning heading into late 2025.

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