Shares of United Airlines Holdings Inc (NASDAQ: UAL) have well over doubled this year but Scott Kirby – the company’s chief executive says the “valuation still seems pretty attractive”.
The airline stock is going for eight times its estimated earnings for the coming year at writing.
That’s attractive considering “both we and analysts think we have multi-year run of improving margins and driving higher EPS,” the air carrier’s CEO said in an interview today.
United Airlines stock doesn’t currently pay a dividend, though.
United Airlines expects a very strong December
United Airlines recently saw its best-day of ticket sales on record and expects this December to be the “best December in our entire history.”
CEO Scott Kirby attributes the strength in UAL to aggressive investments the air carrier has made in its future since the Covid pandemic.
United Airlines has invested about $40 billion since the health crisis and is set to invest another half-a-billion in setting up a state-of-the-art Inflight Training Centre near Dulles Airport in 2025.
The chief executive expects UAL shares to extend their rally as United Airlines “doubles its international service over the coming years.”
International demand, he added, remains very strong for United Airlines Holdings Inc.
United Airlines stock price has more than quadrupled since its pandemic low.
What Trump 2.0 may mean for UAL
United Airlines expects its long-haul business to remain strong even though a number of European carriers plan on adding more transatlantic flights.
That’s because “there’s probably a decade long capacity constraints in the widebody market,” CEO Kirby argued this morning on “Squawk Box”.
Scott Kirby expects the FAA to receive better resources under the Trump administration to improve the infrastructure that may also help United Airlines stock over the long term.
In October, UAL reported a strong third quarter and announced a $1.5 billion stock repurchase programme that have contributed to the ongoing share price rally as well.
United Airlines is the winner in airline industry
The pandemic resulted in a structural change in the airline industry – it divided it into “a couple of winners and everyone else,” according to CEO Scott Kirby.
United Airlines, he’s convinced, is among the former.
Barclays analyst Brandon Oglenski shares his optimism as evidenced in his current price target of $150 that suggests UAL shares could rally another 55% by the end of 2025.
Oglenski expects United Airlines to gain share as industry fundamentals turn sharply positive, capacity growth moderates, and “moats grow deeper for the winners” next year.
The air carrier expects higher fares to enable it to earn up to $3.0 a share on an adjusted basis in its current fiscal quarter – well ahead of $2.0 per share last year and $2.68 a share consensus.
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