BofA Securities analyst, Andrew Didora, has expressed confidence in the future of United Airlines Holdings, leading to an upgrade in their stock rating. In a research note, Didora upgraded the shares of United to Buy from Underperform and increased the price target to $56 from $40. This increase suggests a potential 30% rise from the stock's closing price of $42.92 on Monday.
Didora highlighted the steady demand trends, strong balance sheet execution, and attractive valuation as the reasons behind the upgrade. Despite higher capital expenditures than historical norms, United Airlines has outperformed the industry in terms of revenues.
Currently, United trades at around 4.5 times the firm's estimated earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs for the airline. This valuation is below its historical average.
As a result of this positive news, shares of United Airlines were up 1.3% on Tuesday, reaching $43.46.
It is worth noting that this upgrade comes at a time when investors closely monitor airlines and plane makers. Recent incidents involving Alaska Airlines and United Airlines have brought attention to safety concerns within the industry. However, these specific incidents do not seem to have affected the bullish outlook on United's stock.
In addition to United Airlines, American Airlines Group also received a bullish upgrade this week from Morgan Stanley. Analyst Ravi Shanker upgraded American Airlines stock to Overweight from Equal Weight with a price target of $20. Shanker anticipates continued strength in leisure demand in the coming years.
While American Airlines stock was down 0.8% on Tuesday, Delta Air Lines experienced a 0.4% increase, Southwest Airlines gained 1%, and Alaska Air Group gained 0.8%.
This follows the positive trend seen in the airline industry, with confidence in revenue growth and a positive outlook for the future.