United Airlines stock should rise over the next month on this positive catalyst – Citi

(Updated – January 3, 2024 7:03 AM EST)

Citi analysts opened a positive, 30-day catalyst watch on United Airlines (UAL), while also maintaining a Buy rating.

Analysts are anticipating optimistic 2024E guidance commentary in the forthcoming 4Q results. Hence, Citi views this as a favorable short-term catalyst for the airline’s shares.

The 30-day catalyst watch is driven by United’s favorable combination of revenue momentum, potential seat mile cost dilution from ongoing up-gauging, and a significantly discounted valuation. These factors contribute to Citi’s positive outlook on United’s shares.

Despite a recent 3% increase in shares, United has underperformed relative to its competitors. Citi deems United’s relative underperformance as unjustified, further supporting its positive stance on the airline’s shares.

“United’s 2024 momentum seems underappreciated by the market. The carrier’s strong revenue momentum on the Trans-Pacific- and on mainline domestic corridors, along with seat mile cost dilution associated with re-fleeting, seem underappreciated by the market,” analysts said in a note.

UAL shares are down 1% in pre-open Wednesday.