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United Continental: What Analysts Recommend ahead of Earnings

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Apr. 10 2017, Published 2:27 p.m. ET

Analyst recommendations

According to Reuters consensus, 62.5% of analysts (ten out of 16) tracking United Continental (UAL) have a “buy” recommendation on the stock. The remaining 37.5%, or six analysts, have a “hold” rating on the stock while none have a “sell” rating.

Many analysts have been downgrading the stock price since United Continental’s announcement of increasing capacity by 2.5%–3.5%—much higher than the earlier 0%–1%. Morgan Stanley has cut its target price twice, first from $81 to $77 and then to $74. Cowen and Co. has also cut its target price to $72 from $75. Imperial Capital has cut its target price on UAL from $82 to $75. Evercore ISI has cut the target price to $75, versus $80 earlier, and it has also downgraded the stock from an “outperform” rating to an “in-line” rating. Stanford Bernstein has reiterated its “market perform” rating and maintained its target price at $59. Citigroup is the only research house to have increased the target price, to $77 from $75.

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Target price

As a result of analyst target cuts, the stock’s consensus-12-month target price has fallen to $83.3 compared to $85.4 at the end of 4Q16. The current target price indicates 17.5% return potential as of the April 7, 2017, closing price of $70.9. United Continental’s highest target price is $105 while the lowest target price is $55.

Series overview

United Continental (UAL) is expected to announce its first quarter earnings for 2017 on April 18, 2017. In this series, we look at what investors can expect for 1Q17 and also for 2017 as a whole. We’ll discuss key indicators that investors should look out for.

For Delta Airlines (DAL) pre-earnings analysis, read “What to Expect from Delta’s 1Q17 Earnings” We’ll also offer pre-earnings analysis of other carriers, like American Airlines (AAL), Alaska Air (ALK), Southwest Airlines (LUV), and JetBlue (JBLU).

Investors can gain exposure to United Continental by investing in XTF: Dynamic Market Portfolio (PWC), which invests 2.4% of its portfolio in UAL.

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