Market Overview

The Airline Sector: American, United Have Earned An Upgrade, Bernstein Says

Share:
The Airline Sector: American, United Have Earned An Upgrade, Bernstein Says
Related
Goldman Sachs Clears Airline Stocks For Takeoff
15 Stocks To Watch For October 25, 2018
Tracking Warren Buffett's Berkshire Hathaway Portfolio - Q3 2018 Update (Seeking Alpha)
Related UAL
Goldman Sachs Clears Airline Stocks For Takeoff
Benzinga's Top Upgrades, Downgrades For November 12, 2018
Tracking Warren Buffett's Berkshire Hathaway Portfolio - Q3 2018 Update (Seeking Alpha)

Expansion plans and sector-wide upside drivers give United Continental Holdings Inc (NYSE: UAL) a strong market position while American Airlines Group Inc (NYSE: AAL) remains competitive despite United’s growing market share, according to Bernstein. 

The Analyst

Analyst David Vernon upgraded American Airlines from Market Perform to Outperform with a $62 price target and upgraded United Airlines from Market Perform to Outperform with an $81 price target. 

The Thesis

United’s plans to expand capacity came out much higher than the market expected, as company is aiming for 4-6 percent ASM growth through the next three years, Vernon said. (See the analyst's track record here.) 

This expansion represents an opportunity for United to take market share from other airline companies, worrying some airline investors, the analyst said. 

Other potential upside factors include a significant uptick in the economy, favorable changes in government regulation and lower volatility in fuel prices, Vernon said.

For American Airlines, the market has overstated the effects of United’s expansion plans on the sector, the analyst said. American stands to benefit from strong demand for air travel, cost reduction opportunities and better-than-expected execution on branded fares, Vernon said. 

Price Action

At the time of publication, shares of United Airlines were trading up 0.90 percent at $67.61, while shares of American Airlines traded up 3.27 percent at $54.31. 

Related Links:

Analyst: United Continental Has Hit Peak Altitude

Airline ETF Endures Oil's Rebound

Latest Ratings for AAL

DateFirmActionFromTo
Nov 2018Morgan StanleyMaintainsEqual-WeightEqual-Weight
Nov 2018Goldman SachsInitiates Coverage OnBuy
Oct 2018Deutsche BankUpgradesHoldBuy

View More Analyst Ratings for AAL
View the Latest Analyst Ratings

Posted-In: airlines BernsteinAnalyst Color Upgrades Price Target Travel Analyst Ratings General Best of Benzinga

 

Related Articles (UAL + AAL)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
LXFTKeyBancDowngrades0.0
CPAImperial CapitalDowngrades68.0
PRMWImperial CapitalInitiates Coverage On18.0
TGTKeyBancInitiates Coverage On110.0
QCOMMorgan StanleyUpgrades0.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Attention Biotech Investors: February PDUFA Catalysts Come Calling

RBC Likes Express Scripts After 'Sharp' Pullback