United Airlines expects first monthly pre-tax profits since Covid: time to buy?

on Jun 28, 2021
  • United Airlines expects July to be its first adjusted monthly pre-tax profits since the pandemic hit.
  • The company’s bottom line has benefited from the air travel re-openings and expects it to peak in July.
  • It could boost the stock price. So, is it time to buy?

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United Airlines Holdings Inc. (NASDAQ:UAL) stock on Monday fell 2.77%, extending the current monthly decline to more than 13%. The stock has suffered from the pandemic amid travel restrictions. However, the immediate future looks brighter with the return of air travel and July, the peak summer month arriving. UAL expects to net a monthly pre-tax profit for the first time since the pandemic started in July.

Should you buy UAL shares in July?

From a valuation perspective, UAL stock trades at an attractive forward P/E 19.99, making it a potential buy. In addition, analysts expect earnings to grow 120% next year. 

The stock could become more compelling in the coming quarters as the world slowly returns to normalcy. However, this year’s struggles are not over. Analysts predict earnings to plunge by a whopping 318% before recovering next year.

Source – TradingView

Technical overview

Technically, UAL appears closer to hitting oversold conditions in the 14-day RSI. It recently fell below the 100-day moving average. A rebound could be close.

Investors can target rebound profits at approximately $56.21 and $60.24. The key support levels are $48.96 and $44.76.

Bottom line: UAL rebound looks likely

Although UAL shares still trade under immense bearish pressure, the stock looks poised for a rebound. However, it could still fall further after that ahead of next year’s earnings growth.