Opinions
Bryn Talkington
United Airlines Holdings
UAL-Q
DON'T BUY
Oct 18, 2023
Stock price when the opinion was issued
You might be interested:
As US air travel breaks all time records, we select UAL as a TOP PICK. The FAA just cleared them to continue expansion plans following the recent spat of flight mishaps. It trades at 6x earnings, under 2x book and supports a 33% ROE. Cash reserves are growing, while debt is aggressively retired. We recommend setting a stop-loss at $41, looking to achieve $68 -- upside potential of 30%. Yield 0%
(Analysts’ price target is $68.67)Yesterday, they reported a surprisingly strong quarter with in-line sales, an earnings beat, but share flatlined today. Why? UAL offered 2 sets of guidance--one for a stable economy and the other for a recession. That's a brilliant idea. Bookings could be stable or weaken. Both forecasts are certainly possible.
Airlines are destroyers of wealth. Rent, but don't own an airline sock. Going back to 2006, UAL's total return is 8%, and down over 50% in the last 5 years. Same with their peers.