On Tuesday, American Airlines Group Inc. (NASDAQ:AAL) shares edged 1.16% higher despite reports the airline industry could face headwinds in the post-summer period. In their latest update, Bank of America analysts said airline tickets for the final week of August fell 51.9% compared to the same period in 2019.
However, the firm also noted that this was a slight improvement from the preceding week, which showed a decline of 61.5%. It attributed the slight shift in comparison to the Labor Day holiday and the impact of Hurricane Dorian in 2019.
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The firm also warned about the potential impact of the delta variant following the conclusion of the summer season.
The analysts wrote:
When we compare net sales vs the week leading up to Labor Day in 2019, system net sales were down – 63.6%, which is more comparable to last week’s data. Similarly domestic and international tickets sold fell -2.0% (-29.3% last week) and -25.8% (-46.1% last week).
American Airlines shares could slide further on declining EPS
American Airlines shares are down nearly 24% since the start of June. However, the current decline seems poised to continue amid falling earnings. Analysts expect AAL earnings per share to decline by 583.80% this year before bouncing back 114% next year.
Therefore, given the uncertain circumstances created by the delta variant and the conclusion of the summer season, American Airlines’ share price could continue to fall. However, the stock trades at an attractive forward P/E ratio of 20.03, making it attractive to value investors.
As a result, some investors could find AAL shares compelling if the covid situation eases towards the tail-end of the year.
American Airlines current trend seems set to continue
Technically, American Airlines shares appear to be trading within a descending channel formation in the intraday chart. However, the stock price is yet to sick to oversold conditions, remaining centrally in the strength indicator.
Therefore, the stock price could swing in any direction in the coming days or weeks, creating multiple opportunities to profit.
As a result, investors can target upward profits at approximately $21.08 or higher at $22.51. On the other hand, if the price falls further, it could find support at $18.22 and $16.60.
Bottom line: American Airlines could struggle to overcome downward pressure
In summary, although the stock price seems poised to swing in either direction, the descending channel formation indicates downward pressure.
Therefore, with no significant catalysts on the horizon amid a raging delta variant, the AAL stock price could find more room in the lower sections of the strength indicator.
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