BofA Raises Price Target for United Continental Holdings Inc; Stock Surges In Pre-Market

Bank of America Merrill Lynch raised its Price Target from $40 to $44 on United Continental Holdings, Inc. UAL and maintained its Underperform Rating in a report issued Wednesday.

United Continental Holdings, Inc. “announced better than expected revenues and expenses for the third quarter, implying 3Q earnings of $2.60-$2.70” versus street estimates of $2.39, according to analysts Glenn D. Engel and David van der Keyl.

By comparison, American Airlines AAL and Delta Airlines DAL “trimmed unit revenue guidance intra-quarter, while UAL announced that 3Q Passenger Revenue per Available Seat Mile (PRASM) would grow 3.5-4.0 percent, at high end of prior 2-4 percent range.”

According to Engel, US dollar appreciation versus “most major currencies over the past few months,” and has provided “a headwind to international carriers such as United.”

The report concluded that “UAL is riding the most favorable earnings momentum in the sector, but international supply concerns and still too-high valuation (10% EBITDAR premium, 40% pretax earnings premium) keep us at Underperform."

Engel noted that the biggest risk to the Price Target is fuel price volatility.

United Continental Holdings, Inc. recently traded at $45.89 in the pre-market Thursday, up 4.70 percent.