United Airlines Holdings Inc. (NASDAQ:UAL) is one of the 10 most undervalued industrial stocks to buy according to analysts. The airline industry has been on the receiving end throughout this year, and United Airlines has been no exception, with a 19% decline in share prices. However, this comes on the back of a strong 135% appreciation in 2024.
Following the Iran-Israel military conflict, on June 18, David Vernon from Bernstein marginally lowered his price target ($105 from $104) but maintained an Outperform rating on UAL. The analyst is factoring in a higher fuel price and risks due to the escalation, which has led him to lower his estimates and price target. He also believes that it will be difficult for the airline to pass on the cost to the consumers. Moreover, he also believes that the escalation will likely impact the summer travel season.
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While it is well understood that the airline business is typically volatile, this year has presented several challenges, including heightened safety concerns following some crashes and incidents, fallout from the global trade war, immigration concerns in the US, and macroeconomic uncertainties.
All these issues made the operating conditions challenging for the airlines so much so that United Airline had to issue two profit outlooks in April – adjusted EPS were guided at $11.50 to $13.50 this year if the current environment remains stable; or it can go down to as much as $7 if the US economy enters a recession.
In late May, UAL announced a partnership with JetBlue Airways (NASDAQ: JBLU) called ‘Blue Sky’, which reflects the company’s proactive effort to address ongoing challenges. Following that, an analyst from UBS called the agreement as a positive step for both airlines, as he sees ample synergies between their networks. As the deal doesn’t involve any code sharing, joint capacity planning, or revenue sharing, the analyst also sees minimal regulatory issues.
United Airlines Holdings Inc., through its subsidiaries, owns and operates airlines that transport people and cargo throughout North America and to destinations worldwide.
While we acknowledge the potential of UAL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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Disclosure: None.
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