On Friday, TD Cowen demonstrated confidence in United Continental (NASDAQ:UAL) by increasing the company's price target from $142.00 to $165.00, while reiterating a "Buy" rating. The optimism from the firm comes after United's recent earnings call, which provided insights into the company's future prospects. According to InvestingPro data, four analysts have recently revised their earnings estimates upward, while the company's P/E ratio of 11.02 suggests attractive valuation relative to its growth potential.
UAL is seen by TD Cowen as exceptionally well-placed to benefit from the current industry dynamics through long-term investments in both aircraft capital expenditures and efforts to enhance the customer experience. These strategies are anticipated to boost profit margins in 2026 and beyond. The company's strong positioning is reflected in its impressive 152.2% return over the past year, as tracked by InvestingPro. Additionally, the company's net leverage is projected to be less than two times during 2025, with $1.4 billion remaining in its share buyback authorization.
The revised price target reflects an updated model incorporating United's actual fourth-quarter 2024 and full-year 2024 results, as well as guidance for the first quarter of 2025 and the full year. With a market capitalization of $34.9 billion and projected revenue growth of 7% for FY2025, United continues to demonstrate strong fundamentals. For the first quarter of 2025, TD Cowen expects United to achieve a capacity growth of 3.5%, a load factor of 81%, and a revenue per available seat mile (RASM) of 18.51 cents. The cost per available seat mile excluding fuel (CASMex) is estimated at 13.76 cents, with fuel costs at $2.65 per gallon. The adjusted earnings before interest and taxes (EBIT) margin is anticipated to be 4.5%, with an adjusted earnings per share (EPS) of $1.10. For deeper insights into UAL's valuation and growth prospects, access the comprehensive Pro Research Report available on InvestingPro.
For the full year 2025, the firm's outlook includes a capacity growth of 5.4%, a load factor of 83.3%, and a RASM of 18.94 cents. The CASMex is projected to be 12.99 cents, with fuel costs slightly lower at $2.57 per gallon. The full-year adjusted EPS estimate remains at $13.14, although quarterly assumptions have been adjusted. The new price target of $165 is based on 10.7 times the firm's adjusted EPS estimate for 2026.
In other recent news, United Airlines has seen a flurry of analyst activity. CFRA upgraded United Airlines to a Buy rating with a new price target of $123, citing operational efficiency and strong Q4 performance. Similarly, TD Cowen raised its price target for the airline's shares to $142, maintaining a Buy rating, while Bernstein maintained an Outperform rating with a price target of $115.
United Airlines' Q4 earnings per share (EPS) reached $3.26, surpassing estimates by $0.23, and revenue exceeded expectations at $14.7 billion. The company also set a 2025 EPS target range of $11.50 to $13.50, indicating a positive financial trajectory.
Changes in the board of directors also occurred, with Brian Noyes replacing Captain Anne Worster. This transition was not due to any disagreements regarding United's operations, policies, or practices. The company also updated its bylaws to align with current Delaware law and best practices.
The airline industry is expected to benefit from a 20% drop in Brent crude oil prices and a surge in demand in the air cargo market. These developments, along with strong earnings and revenue performance, have contributed to the positive sentiment surrounding United Airlines.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.