United Airlines stock price target lowered to $128 at UBS on cost concerns

Investing.com - UBS lowered its price target on United Airlines (NASDAQ:UAL) to $128.00 from $131.00 on Friday, while maintaining a Buy rating on the stock. The airline, currently trading at $99.24 with a market capitalization of $32.16 billion, shows strong fundamentals according to InvestingPro data, with a notably low P/E ratio of 10.4.

The price target reduction follows United Airlines’ indication of "above normal growth" in cost per available seat mile excluding fuel (CASM ex) expected in 2026, which UBS believes contributed significantly to the stock’s 5.6% decline against the S&P 500’s 0.6% drop.

While United Airlines did not provide specific CASM ex guidance for 2026, UBS estimates growth of 3% to 4%, considering a normal baseline of 2%-3%, additional pressure of 1.5%-2% from an anticipated flight attendants contract, partially offset by the airline’s cost control efforts. With annual revenue of $58.37 billion and EBITDA of $8.07 billion, InvestingPro analysis reveals 10+ additional key insights available for subscribers.

UBS noted United Airlines reported strength in bookings for September and October, supporting expectations for significant improvement in revenue and total revenue per available seat mile (TRASM) performance in the fourth quarter of 2025.

The firm forecasts a TRASM decline of just 0.3% year-over-year in Q4 2025, a substantial improvement from the 4.3% year-over-year decline seen in the third quarter.

In other recent news, United Airlines reported its third-quarter 2025 earnings, with an earnings per share (EPS) of $2.78, surpassing analysts’ expectations of $2.67. However, the airline’s revenue came in at $15.2 billion, slightly below the anticipated $15.33 billion. Morgan Stanley has raised its price target for United Airlines to $140 from $130, maintaining an Overweight rating due to a positive outlook on EPS growth, which is expected to exceed $15.

Meanwhile, United Airlines CEO Scott Kirby has expressed concerns about the ongoing government shutdown. He warned that the shutdown could adversely impact airline bookings and flight operations, exacerbating the current shortage of air traffic controllers and causing delays in some cities. These developments highlight the challenges and opportunities facing United Airlines as it navigates a complex operating environment.

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