gk-6mt/iStock Editorial via Getty Images
Evercore ISI upgraded United Airlines Holdings (NASDAQ:UAL) on Friday to an Outperform rating after having the airline stock slotted at In-Line.
Analyst Duane Pfennigwerth pointed to investor-friendly moves such as a likely shift in capital allocation.
He noted that the firm has been watching UAL from the sidelines despite strong network and revenue management execution and derated/bargain bin valuation.
“United has executed well vs. targets and has long offered a sharply discounted valuation (currently ~4x EPS). Despite many positive attributes, the lack of balance in capital allocation (high aircraft cap ex plans) has held us back. However, for the first time in years change is in the air on this front, aided by recent change in financial leadership.”
Evercore thinks a meaningful shift or rethink on capital allocation would be a very significant unlock catalyst for UAL shares, and add to the upside presented by improving industry conditions.
The Wall Street analyst scorecard on UAL shows 18 Buy-equivalent ratings or higher, 4 Hold-equivalent ratings, and no Sell-equivalent ratings.
Shares of United Airlines (UAL) rose 2.45% in premarket trading to $42.62 vs. the 52-week range of $33.68 to $58.23.