UBS raises United Airlines stock rating, targets $105

On Monday, UBS analyst Thomas Wadewitz upgraded United Airlines stock from Neutral to Buy, significantly raising the price target to $105 from the previous $67. This adjustment reflects a positive outlook on the airline’s future, anticipating a rebound in corporate travel and sustained strength in premium and international revenue streams. The company, currently valued at $25.45 billion, has demonstrated strong profitability with revenues reaching $57.74 billion in the last twelve months.

Wadewitz’s analysis suggests that United Airlines is well-positioned to benefit from the current economic environment, which is showing signs of stability and a diminishing likelihood of a recession. The airline’s market performance in international travel, in particular, is expected to be a strong driver of growth. According to InvestingPro data, the company has maintained strong operational metrics, with an EBITDA of $8.5 billion in the last twelve months.

United Airlines has also shown a capacity to increase its domestic market share while maintaining a favorable margin performance. This strategic positioning is likely to result in upward revisions of the company’s financial estimates in the weeks ahead, which could, in turn, drive the stock price higher.

Moreover, United Airlines’ current valuation, trading at a modest 6x multiple, indicates potential for further expansion of its market multiple. The combination of these factors led to the revised rating and price target, signaling confidence in United Airlines’ trajectory in the near future.

The new price target of $105 represents a significant increase from the prior target, underscoring UBS’s optimistic stance on United Airlines’ stock performance and its ability to capitalize on the expected industry recovery.

In other recent news, United Airlines has been actively involved in several notable developments. The airline has announced a significant investment in aerospace startup JetZero, focusing on the development of a new blended wing body aircraft. This agreement could result in United purchasing up to 200 of these innovative airplanes, contingent on developmental milestones. In addition, United Airlines has been in discussions with JetBlue Airways (NASDAQ:JBLU) about forming a partnership to enhance customer connectivity and frequent-flier mile options. This potential alliance is distinct from JetBlue’s previous Northeast Alliance with American Airlines (NASDAQ:AAL). Furthermore, United Airlines canceled its flight to New Delhi due to escalating tensions between India and Pakistan and subsequent airspace restrictions. Meanwhile, analysts at BofA Securities have maintained a Buy rating on United Airlines, with a $90 price target, citing the airline’s diversified revenue streams and robust loyalty program. The FAA has also reported a new outage at a Philadelphia facility affecting Newark Liberty airport, impacting United Airlines as the largest carrier there. These recent developments reflect United Airlines’ strategic moves and challenges in the current aviation landscape.

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