United Continental Holdings Inc (NYSE:UAL) stock finished Tuesday’s trading up nearly 9% thanks to a late-day push spurred by an analyst upgrade.
Deutsche Bank analyst Michael Linenburg gave UAL stock the nod with an upgrade to “Buy,” along with competitors Delta Air Lines, Inc. (NYSE:DAL) and American Airlines Group Inc (NASDAQ:AAL). He believes industry headwinds are already more than baked into shares, and that an important industry metric isn’t being appreciated as much as it should.
On the latter front, Linenberg said, “Moderating capacity growth, strengthening of key currencies — save for the British pound — higher fuel surcharges and a decent U.S. economic backdrop should collectively result in less negative PRASM/RASM.”
Linenberg also said that the Brexit, weak global economic growth and other downward pressures have already been more than fully accounted for in UAL, DAL and AAL.
Technically speaking, the move shot UAL stock past its 50-day moving average around $43.90, with shares finishing at $46.16 — right around where UAL was trading before the post-Brexit dip.
Also helping fuel Tuesday’s rise was a late-Monday report on June traffic numbers. Traffic of 19.6 billion revenue passenger miles was up 1.4% year-over-year, and load factor was up 80 basis points to 87.1%. Most encouraging was its outlook for second-quarter consolidated PRASM, which came in a range of 6.5% to 6.75% contraction — better than the 7.5% decline expected by Wall Street analysts.
The next catalyst for a United Continental move should come lat next week, as UAL is expected to report second-quarter earnings on Thursday, July 21.
As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.
