CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
Our 12-month target of $46, down $1, is 4.3x our 2025 EPS view (starting at $10.69; 2024’s cut to $9.08), below UAL’s 2018-2019 historical forward average of 8.4x. We think a discount is merited due to UAL having to ground its 737 MAX 9 aircraft, reducing its total capacity by 8% and causing unit costs to rise. Q4 EPS of $2.00 vs. $2.46 beat consensus by $0.30. Q4 passenger revenues grew 9% Y/Y due to its int’l segment (+18%), while capacity increased 15% Y/Y. For 2024, we believe that UAL could face headwinds with rising unit costs (aside from the 737 MAX 9 groundings) due to new labor agreements, while delays in new aircraft deliveries are hindering UAL from retiring older aircraft and causing maintenance costs to increase. As a result, we estimate that UAL’s unit costs could rise by 5% in 2024. UAL noted its 2024 capex outlook is in range of $9B (vs. $7B in 2023); however, we wouldn’t be surprised if UAL lowers its outlook in 1H 2024 due to delays in receiving its expected MAX 9 aircraft (31 total) in 2024.