Why Analysts Boosted United Airlines Stock Ahead of Earnings

Key Points

• A recent reiteration of a Buy and double-digit upside for United Airlines stock is driving investors to question what's behind the current view.
• Despite recent bearish price action, analysts were okay with maintaining an optimistic outlook.
• Price action and some fundamental factors reiterate this view.

When Wall Street analysts decide to publish their view on a stock, investors tend to dismiss it as only being part of the regularly scheduled posts that these analysts have to make. However, the timing of these rating publications and the broader context matters a lot more, especially during times like today when the S&P 500 sell-offs drag just about any other stock down along with it.

Wall Street analysts are typically reluctant to raise a stock’s outlook—or even reaffirm a bullish stance—when it’s under pressure from recent bearish price action. That makes it even more significant when they do. When analysts choose to boost a stock’s outlook during periods of turmoil, it often carries far more weight than similar upgrades made under normal conditions.

Secondly, in the case of today’s recent boost in shares of United Airlines Holdings Inc. NASDAQ: UAL, some analysts decided to boost the stock’s price target and rating right before earnings season gets kicked off for the transportation sector, where airlines lead the first wave of results and announcements. Is this a high-risk contrarian bet that United can surprise the market? Or is this based on something entirely more concrete?

United Airlines Stock Carries Preference

Over the past 12 months, investors can look at one factor that might have swayed these analyst decisions recently: the price action in United Airlines stock compared to that of other close peers like American Airlines Group Inc. NASDAQ: AAL and Delta Air Lines Inc. NYSE: DAL during the same period.

Spreading this performance this way would lead investors to a painfully obvious conclusion. United Airlines closed in on a 35.3% rally for the one year in question, while Delta and American delivered a respective loss of 21.2% and 30.3%. Such a divergence has to come from the market’s forward-looking view on these stocks, something that perhaps gave these analysts the courage to step in with a bullish view despite the recent declines.

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More than just stronger price action, United Airlines stock claimed another stake on the ground of optimism for its future, this time through a 7.6% decline in its short interest over the past month alone. This behavior, even during one of the worst months in the history of the S&P 500 index, is a clear sign of bearish capitulation happening now.

Combining these factors could have led analysts from Barclays to keep a $140 per share price target on the stock as of March 2025. This view going into earnings season would call for the stock to rally by as much as 138% from where it trades today, not to mention make a new 52-week high to potentially attract more momentum buyers in the stock.

Fundamentals Lead the Way for United Airlines

One of the biggest benefits of airline stocks during volatile times like these is the lower price of oil, as the broader market adopts a “risk-off” attitude and moves away from some of the assets that are most exposed to the underlying economic cycle.

With this in mind, it’s easy for investors to conclude that lower oil prices will directly benefit United’s fuel costs—a tailwind that could translate into stronger reported earnings per share (EPS).

This view doesn’t have to be limited to the drawing board, as Wall Street analysts now forecast up to $4.38 in EPS for the second quarter of 2025, a significant boost of 35% from today’s reported $3.26 in EPS. Now, the path isn’t as straightforward as it may seem; there are some potential downsides investors must consider.

One of them is the recent slowdowns in consumer spending and consumer credit, which ties directly to contracting sentiment. As this hierarchy of spending starts to turn into mass psychology, travel spending will likely be one of the first items to go out the window for the American consumer.

But considering that short sellers have been out of this stock over the past month and that United Airlines now sports a new stake from institutional buyers at Gamma Investing worth up to $24.9 million, these downside considerations might end up being precautionary fears rather than scenarios to be realized in the market.

Now, investors have a pretty good picture of why these analysts decided to remain bullish on the stock when President Trump had already floated around the weight of tariffs since the fourth quarter of 2024. Price action and momentum are there against peers, and the fundamental story aligns for further EPS expansion from where it sits today.

And as investors know, where EPS goes, the stock price usually follows.