Here’s Why We Have Revised United Continental’s Price Estimate To $52 Per Share

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UAL
United Airlines Holdings

United Continental (NYSE:UAL), one of the legacy carriers in the US, has dropped more than 25% over the last three months due to its disappointing financial results for the March quarter of 2016. The airline reported a decline in its net earnings in the first quarter, despite its competitors posting extraordinary growth in earnings on the back of lower fuel costs. In addition, the company has downwardly revised its capacity growth target for 2016 from 1.5%-2.5% to 1%-2%, largely to streamline its operations and weather the currency headwinds. Further, the Chicago-based airline also increased its fuel cost guidance from $1.25-$1.30 per gallon to $1.40-$1.45 for the full year, due to the faster-than-expected recovery in crude oil prices over the last couple of months. Finally, the network carrier has raised its 2016 capital expenditure guidance to $3.1-$3.3 billion, $400 million higher than its previous target. Based on these factors, we have revised our price estimate for United Continental to $52 per share.

UAL-Q&A-13

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for United Continental

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