To Buy or Not to Buy: Evaluating the Dip in United Airlines Stock

United Airlines Stock

United Airlines Holdings (UAL:NSD) recently updated its Q1 guidance, resulting in a 7% fall in its share prices during after-hours trading. The new guidance predicts an adjusted loss between $0.60 and $1 per share for the quarter, a significant shift from its earlier projection of adjusted earnings per share between $0.50 and $1. The change in the guidance can be attributed to the timing of expenses related to the potential collective bargaining agreement with employees and an increase in fuel prices.

Despite the disappointing Q1 guidance, Bernstein analyst David Vernon remains bullish on United Airlines stock, considering the weakness in its shares as a buying opportunity. Vernon has set a price target of $71 for United Airlines stock, indicating an upside potential of 45.40%.

United Airlines expects strong demand in Q1 and has forecasted a year-over-year increase in total operating revenue of about 51%. However, the company noted a seasonality shift, leading to lower demand in January and February of 2023. Despite this, the company’s full-year earnings outlook remains unchanged, with expectations for EPS to be between $10 and $12. If the company achieves its growth forecast, its revenue for Q1 of 2023 could reach $11.43 billion, slightly below the Wall Street consensus estimate of $11.47 billion.

Currently, UAL stock commands a Buy consensus rating among analysts, United Airlines stock has an Outperform Smart Score of nine, indicating a positive sentiment among market participants. However, hedge funds sold 1.8M shares of UAL in the last quarter, and insiders sold UAL stock worth $1.1M in the last three months.

Overall, while the Q1 guidance fell below expectations, the potential for future growth and the bullish sentiment of some analysts suggest that United Airlines stock could present a buying opportunity for investors.

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