United Airlines stock has a 50% upside from here: Morgan Stanley

By:
on Dec 5, 2022
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  • Ravi Shanker upgraded United Airlines stock to "overweight" on Monday.
  • The Morgan Stanley analyst gave several reasons to be bullish in his note.
  • Shares of United Airlines Holdings are roughly flat for the year at writing.

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United Airlines Holdings Inc (NASDAQ: UAL) is keeping in the green on Monday in an otherwise down market after a Morgan Stanley analyst said 2023 could be a “goldilocks” year for the air carrier.

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United Airlines stock has upside to $67

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Ravi Shanker sees upside in the airline holding company to $67 that translates to a near 50% premium on its current stock price.

He upgraded United Airlines stock to “overweight” this morning because he’s convinced that international travel will recover swiftly in 2023.

Earnings recovery post pandemic has kept pace with, if not led, peers and messaging has been very confident. We expect more normalised, just right conditions in 2023, stabilizing at level more favourable to earnings that market is pricing in.

Shanker expects continued leisure demand next year while business travel, he wrote, could exceed levels last seen before the COVID pandemic.

UAL has outperformed peers year-to-date

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According to the Morgan Stanley analyst, prices will ease in 2023 as capacity returns. CASMxF trajectory was among other reasons cited for the bullish call.

United Airlines stock is roughly flat for the year at writing versus other major airline stocks in the red. Still, Shanker continues to see its current valuation as attractive. His note reads:

United Airlines Holdings Inc seems on track to exceed its 2023 guidance and to hit its 2026 guide issued eighteen months ago – something even the biggest UAL bulls may have considered difficult at the time.

In October, the Chicago-headquartered air carrier reported its financial results for the third quarter that handily topped Street estimates.

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