UPDATE: J.P. Morgan Upgrades AMR Corporation to Overweight, Reiterates $9.50 PT on Likelihood of US Airways Merger

In a report published Thursday, J.P. Morgan analyst Jamie Baker upgraded the rating on

from Neutral to Overweight, and reiterated the $9.50 price target. In the report, J.P. Morgan noted, “We are boosting our estimated likelihood of a merger by AMR/US Airways this winter from 50% to 60%, with a verdict expected no later than January 18, 2014. We've also refreshed the claims math supporting our long-standing AAMRQ analysis (adjusting for potential lack of liquidity and the impact of AMR's convert). Given our YE14 LCC price target of $29 (discounted back to $25 to reflect 1H14 potential deal closure), we can envision an AAMRQ share price as high as $13 in the event of a court win or value-preserving negotiated solution. More importantly, we believe AAMRQ could still be worth at least $3.50 in a stand-alone scenario (with some material caveats), assuming comparatively modest EBITDAR and multiple assumptions. This suggests current fair value nearing $10, in our view justifying an upgrade from Neutral to Overweight and establishment of a $9.50 price target.” AMR Corporation closed on Wednesday at $5.14.