Raymond James has upgraded American Airlines Group ( AAL , Financial ) to "Outperform" from "Market Perform" on a favorable revenue outlook and enhanced risk-reward dynamics. The brokerage also boosted its price target to $24, based on the airline's strategic positioning and potential to generate earnings.

Recent updates are also good news for American Airlines, which senses a stronger revenue environment due to an uptick in corporate customer engagement and competitive domestic capacity management. While the airline's co-branded credit card deal with the airline's new co-branded credit card deal is expected to generate relatively modest benefits, planned changes in the airline's cabin configuration and the alignment of the airline's supply of capacity with the airline's demand that the airline's demand is price sensitive are viewed as the most important revenue growth drivers.

Even while elevated compared to the forward curve, a revised fuel cost forecast adds another layer of potential earnings support. It also forecasts that international demand will be boosted, with the strength of the U.S. dollar helping Americans in South America.

Raymond James said the airline industry is entering a beneficial phase, with lower regulatory risks and a chance for more mergers and acquisitions among smaller carriers. This could lead to other opportunities for American Airlines and its competitors.

While the brokerage remains optimistic about America's near-term prospects, it highlighted Delta Air Lines ( DAL , Financial ). It has cited its broader international exposure and robust risk-reward profile, making it its top pick for mediumto long-term investments in DAL.

With U.S. airline earnings winding down, Raymond James outlines the changing landscape of the aviation space as mainline carriers seek to cater to more premium-oriented domestic services and demand.

This article first appeared on GuruFocus .