American Airlines Group Inc. shares fell 4.3% Thursday, after Bank of America Merrill Lynch downgraded the stock to underperform from neutral as it lowered its 2017 earnings estimates for the sector on a higher oil price. Analysts said their second-half 2016 to 2017 fuel curve outlook is now 20% to 16% ahead of their models. With no change expected to airline bookings, they lowered their EPS outlook by 7% to 13% on average and also tweaked their price objectives. "Airlines with conservative balance sheets should fare better (DAL, LUV, ALK, ALGT), but we believe elevated capacity this summer leaves the group more vulnerable to near term demand shocks," they wrote in a note. American Airlines has the highest leverage, the most earnings volatility and is trading at a premium valuation, said the note. Shares are down 31% in the year so far, while the S&P 500 has gained 0.7%.
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