United Airlines Shares Slump Ahead of Q2 Earnings

United Airlines shares slumped over 5% on Monday ahead of the second-quarter earnings results, where the major U.S. airline company is expected to report a loss for the sixth consecutive time of $4.21 as the aviation service provider continues to be negatively impacted by the ongoing COVID-19 pandemic and travel restrictions.

However, that would represent a year-over-year improvement of about 55% from -$9.31 per share seen in the same quarter a year ago. The Chicago, Illinois-based airlines would post revenue growth of over 250% to $5.25 billion, up from $1.48 billion a year ago.

Due to the ongoing COVID-19 crisis, the company reported losses in all four quarters, posting an average negative earnings surprises of 5.39%.

At the time of writing, United Airlines shares traded 5.19% lower at $43.60 on Monday.

United Airlines Stock Price Forecast

Fifteen analysts who offered stock ratings for United Airlines in the last three months forecast the average price in 12 months of $60.46 with a high forecast of $78.00 and a low forecast of $43.00.

The average price target represents a 36.94% change from the last price of $44.15. From those 15 analysts, four rated “Buy”, ten rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $70 with a high of $96 under a bull scenario and $30 under the worst-case scenario. The firm gave an “Equal-weight” rating on the Airlines’ stock.

Several other analysts have also updated their stock outlook. Jefferies lowered the target price to $50 from $55. Evercore ISI slashed the target price to $55 from $66. Bernstein increased the target price to $76 from $67. Cowen and company lifted the target price to $72 from $65. Berenberg upped the target price to $50 from $48.

Analyst Comments

“We like United Airlines (UAL) confidence in providing a 2023 cost guide which includes a goal to permanently reduce $2 bn of cost and at least match 2019 margins. The market is also very keen to see UAL’s go-to-market strategy on the revenue side as travelers return,” noted Ravi Shanker, equity analyst at Morgan Stanley.

“However, the legacy network footprint is a slightly bigger overhang than its network peers and the cap structure will likely take years to normalize, which could remain overhangs on the stock.”