Friday - Wolfe Research has raised its rating on shares of United Continental (NASDAQ:UAL) to Outperform, signaling a positive outlook on the airline's prospects. The firm has set a price target of $76.00 for the stock, indicating a potential for significant gains over the next six to twelve months.
The upgrade is attributed to strong fundamentals observed in legacy airlines, particularly in international, premium cabin, and loyalty program areas. Wolfe Research also anticipates an improvement in domestic main cabin trends during the second half of the year as capacity growth aligns more closely with GDP growth rates.
United Continental's performance has already been strong year-to-date, but Wolfe Research believes there is further growth potential. The analyst notes that United Continental's valuation is compelling and justifies the increased price target and improved rating.
The new price target of $76.00 is based on a 6x price-to-earnings (P/E) and a 5x enterprise value to EBITDAR (EV/EBITDAR) multiple. These multiples reflect the firm's confidence in United Continental's ability to continue its positive trajectory in terms of revenue and earnings.
InvestingPro Insights
As Wolfe Research upgrades United Continental (NASDAQ:UAL) with a robust price target, real-time data from InvestingPro provides additional context to this optimistic outlook. United Continental's market capitalization stands at $18.01 billion, reflecting its significant presence in the airline industry. Its P/E ratio, a measure of the stock's valuation, is attractively low at 6.71, and even more favorable when adjusted for the last twelve months as of Q1 2024, at 5.22. This low P/E ratio, coupled with a PEG ratio of just 0.17 for the same period, underscores the company's potential for growth relative to its earnings.
InvestingPro Tips spotlight United Continental's status as a prominent player in the Passenger Airlines industry, with a noteworthy 30.46% total return on its share price over the last three months. Additionally, analysts have revised their earnings upwards for the upcoming period, reflecting confidence in the company's profitability. For investors seeking more in-depth analysis, there are over ten additional InvestingPro Tips available at https://www.investing.com/pro/UAL. To access these insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
The data and tips provided by InvestingPro reinforce the positive sentiment expressed by Wolfe Research and offer investors a comprehensive view of United Continental's financial health and market position.
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