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Analysts Expect a Huge Rise in United Airlines’ Share Price

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Feb. 11 2019, Published 12:20 p.m. ET

Bullish recommendations

United Airlines (UAL) could be an intriguing choice for investors, according to analysts’ ratings. Analysts covering the stock expect a massive upside in the company’s share prices. About 62% of the analysts have provided bullish recommendations on the airline. The stock has witnessed an upward shift in analysts’ recommendations. United Airlines reported strong fourth-quarter results on January 15.

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The company’s fourth-quarter top and bottom-line results beat analysts’ expectations and marked a significant YoY (year-over-year) improvement. The airline’s earnings mainly benefited from strong revenue growth, efficient cost management, and reduced outstanding shares. Higher revenues from non-ticket sources and an increase in the unit revenues drove the company’s fourth-quarter total revenues.

Before the fourth-quarter results, six analysts recommended a “strong buy” on United Airlines stock. After the earnings were released, seven of the 21 analysts recommended a “strong buy.” Currently, six analysts recommend a “buy” rating. Before United Airlines’ fourth-quarter results, five analysts recommended a “buy.” The number of analysts providing “hold” and “sell” ratings remained unchanged at seven and one, respectively. Looking at the changes in analysts’ ratings, analysts appear to be bullish on the stock.

United Airlines stock has witnessed sharp upward estimate revisions for the EPS in 2019 and 2020. The mean estimate for the 2019 EPS has increased to $11.48 from $10.95 on January 14. The 2020 EPS estimates have improved to $12.15 from $11.87.

Analysts increased their 12-month target price on United Airlines stock after its fourth-quarter results. Currently, the consensus estimate is $104.53, which is 1.5% higher than the target price of $102.94 before the fourth-quarter earnings were released. Based on the closing price of $88.17 on February 8, United Airlines has a return potential of 18.6%.

Peers’ ratings and target prices

Analysts seem to be bullish about the entire airline industry (IYT). Analysts have provided a “buy” recommendation to most of United Airlines’ peers. The one-year target prices for American Airlines (AAL), Delta Air Lines (DAL), Spirit Airlines (SAVE), and Southwest Airlines (LUV) signify an upside of 26.6%, 25.2%, 25.1%, and 10.9%, respectively, from current market prices.

In this series, we’ll discuss United Airlines’ fundamental growth drivers, which could push its share prices higher.

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