United Airlines (UAL): Valuation Check After Wells Fargo Names Carrier Top Pick in Premium-Focused Airline Coverage

Wells Fargo just kicked off coverage of United Airlines Holdings (UAL) with a positive stance on the whole airline sector, spotlighting United as its top pick and leaning on premium demand and loyalty economics.

See our latest analysis for United Airlines Holdings.

The bullish coverage lands on top of an already strong run, with the share price at about $112.85 after a powerful 1 month share price return of nearly 23 percent and an impressive 3 year total shareholder return approaching 195 percent, suggesting momentum is building as investors warm to premium travel and loyalty driven earnings.

If United’s move has you rethinking the whole sector, it could be worth scanning aerospace and defense stocks to see what other transportation linked names are showing similar strength and operational tailwinds.

With United trading near record highs yet still sitting below fresh analyst targets and with some models hinting at a sizable intrinsic discount, is this simply late cycle euphoria or a genuine buying opportunity before markets price in further growth?

Most Popular Narrative: 9.3% Undervalued

With United Airlines Holdings last closing at $112.85 against a narrative fair value in the mid $120s, the valuation case leans on premium focused growth and margin expansion.

Execution of the United Next fleet modernization and capacity expansion strategy, particularly upgauging to larger, more fuel efficient aircraft with more premium seats, is expected to unlock further operational leverage, reduce per seat operating costs, and drive operating margin improvement over the next several years.

Read the complete narrative.

Curious how steady revenue growth, firmer margins, and a richer future earnings multiple all combine to justify a higher fair value than today? The full narrative unpacks the exact earnings step up, the assumed profitability lift, and the valuation multiple the market could ultimately pay, but keeps one crucial assumption hidden in plain sight.

Result: Fair Value of $124.36 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sustained FAA related disruptions and structurally weaker premium business travel demand could quickly challenge the market’s confidence in United’s upgraded earnings path.

Find out about the key risks to this United Airlines Holdings narrative.

Build Your Own United Airlines Holdings Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a custom United thesis in minutes, Do it your way.

A great starting point for your United Airlines Holdings research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

Turn this momentum into a smarter portfolio and put your capital to work with focused stock ideas curated by the Simply Wall St Screener.

• Capitalize on mispriced opportunities by targeting companies flagged as undervalued through these 916 undervalued stocks based on cash flows grounded in future cash flow potential.
• Ride the structural shift toward intelligent automation by zeroing in on innovation led businesses across these 24 AI penny stocks.
• Lock in reliable cash returns with income focused companies filtered via these 13 dividend stocks with yields > 3% offering yields above 3 percent.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com