United Airlines
stock rose Tuesday after a BofA Securities analyst upgraded the stock, citing confidence in the future of the airline company’s revenue growth as demand remains strong.
BofA Securities analyst Andrew Didora upgraded shares of
United
to Buy from Underperform, and raised his price target to $56 from $40, which implies a 30% increase from the stock’s closing price of $42.92 on Monday.
“UAL’s steady demand trends, strong balance sheet execution despite high capex, and attractive valuation are the reasons for our Buy rating,” Didora said in a research note Tuesday.
“While industry risks remain and capex is above historical norms, UAL has outperformed the industry on revenues,” he said.
Didora added that United currently trades around 4.5 times the firm’s 2024 estimated earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs for the airline. That is below its historical average.
Shares of United were rising 2.1% to $43.83 on Tuesday.
The upgrade comes during a time where airlines and plane makers are being closely monitored by investors. Last week, part of the body of an Alaska Airlines flight came off the plane shortly after takeoff. United said Monday that it found four instances in which bolts on the door plugs of other airplanes appeared to have installation issues.
United isn’t the only airline to get a new bullish call this week.
Morgan Stanley
upgraded
American Airlines
to Overweight from Equal Weight with a $20 price target on Monday. Analyst Ravi Shanker said he believes leisure demand strength will continue in 2024.
American Airlines stock was down 0.4% Tuesday while
Delta Air Lines
was up 0.8%,
Southwest Airlines
gained 1.1% and
Alaska Air
gained 1.2%.
JetBlue Airways,
meanwhile, was falling 9.9% to $5.19 after Didora downgraded the stock to Underperform from Neutral. Didora’s downgrade was due to execution risks around its proposed merger with
Spirit
and ongoing engine problems.
Write to Angela Palumbo at [email protected]
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