“Our conviction in the recovery story doesn’t change,” McKenzie wrote. He still likes American as a long-term “fixer-upper” and margin-improvement story. But with shares up more than 50% since early November, including a 9% gain this year, he doesn’t see much upside and withdrew his prior $19 target.

McKenzie isn’t the only analyst who sounds flummoxed by American’s rising stock. The average target on the stock is about $12, according to FactSet, with an Underweight rating. Estimates are as wide-ranging as a global flight map. 

At the low end, Evercore ISI’s Duane Pfennigwerth pegs the equity value of American at $1. Wolfe Research’s Hunter Keay sees the stock at $5.  UBS’s Myles Walton values the stock at $10. Citigroup’s Stephen Trent pegs it at $15 while Cowen’s Helane Becker has it at $16. 

Other analysts are no longer venturing an official guess on where shares will go. JP Morgan’s Jamie Baker withdrew his target on American last week, reiterating an Underweight rating. Raymond James’ Savanthi Syth has an Underperform on the stock, but no target.

American’s stock poses more challenges than other airlines for a few reasons. Its balance sheet is more precarious than any other carrier, weighed down by $34 billion in net debt. The airline disclosed plans last week to issue another $1.1 billion in equity, further diluting the outstanding share count by 10%.

The carrier’s route structure and income profile are tilted to international exposure, also posing problems for forecasts. Predicting an international recovery is getting tougher with Covid variants causing more countries to restrict air travel and delay the lifting of quarantine requirements.

The U.S. now requires all international passengers to produce a negative Covid test or proof of recovery upon arrival. American’s spring break markets in Mexico and the Caribbean could come under pressure in the next few months if all the testing requirements prove too onerous for many travelers.

The fast-moving Covid situation caused Seaport’s McKenzie to downgrade the stock. The variants “likely delay the international revenue story given vaccine rollouts that lag the US, hence the reduced earnings visibility and trim to our pre-tax earnings outlook.”

The other challenge is short-interest. About a quarter of American’s shares were held short as of Dec. 31, according to FactSet, far more than any other carrier. The next highest short-interest was in Spirit Airlines (SAVE) at 14% of the float, while most other carriers are well below 10%. 

American’s stock has proven vulnerable to a squeeze as traders who bet against the stock scramble to cover their losses by buying shares, putting upward pressure on the price. The stock popped last week amid the short-squeeze frenzy that drove up GameStop (GME) and other highly shorted stocks.

American may be the next target of a squeeze play by the legions of retail investors taking on Wall Street’s most popular short trades. If it’s not trading on the fundamentals, figuring out a value may be more about guessing market psychology than analyzing facts like sales and earnings.

Write to Daren Fonda at daren.fonda@barrons.com