Shares of American Airlines Group Inc. ran up 1.8% in premarket trade Tuesday, after the air carrier was upgraded for a second straight day, this time by J.P. Morgan. Analyst Jamie Baker raised her rating to overweight from neutral, and her stock price target to $61 from $52. Baker believes that several initiatives, such as expansion of basic economy and higher paid load factors in the domestic premium cabin will drive higher returns and stronger unit revenue. "Additionally, American will host its first post-merger investor day in September, and we could envision several positive outcomes from that including more concrete longer term financial targets and improved capital allocation," Baker wrote in a note to clients. On Monday, Cowen & Co.'s Helane Becker upgraded American to outperform, citing a "compelling" earnings outlook for next year. Baker also upgraded Spirit Airlines Inc. to outperform from neutral, saying the price war with United Continental Holdings Inc. is "less dire" than investors appear to believe. American's stock has gained 8.0% year to date through Thursday while Spirit shares have tumbled 33%. Meanwhile, the NYSE Arca Airline Index has slipped 0.4% and the S&P 500 has gained 10%.
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