CFRA Keeps Hold Opinion On Shares Of United Airlines Holdings, Inc.

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.

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