Rising Oil Prices Weigh on United Airlines Stock
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy UAL?
Source: Benzinga
- Oil Price Impact: Crude oil prices have surged to six-month highs due to stalled U.S.-Iran nuclear talks, with Brent rising approximately 1.5%, which pressures United Airlines' fuel costs and negatively impacts profit margins.
- Earnings Expectations Downgrade: Fuel represents one of United's largest variable expenses, and as oil prices rise, the airline may need to increase fares or cut capacity, both of which could dampen demand and lower earnings expectations.
- Technical Indicator Analysis: Despite a 3.50% drop to $112.84, UAL remains above its 20-day and 50-day simple moving averages, indicating some short-term strength, with an RSI of 58.23 suggesting a neutral trend.
- Analyst Bullish Outlook: Analysts maintain a positive outlook with an average price target of $135.71, with TD Cowen and UBS raising their targets to $140.00 and $147.00, respectively, reflecting confidence in United's future performance.
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Analyst Views on UAL
Wall Street analysts forecast UAL stock price to rise
16 Analyst Rating
15 Buy
1 Hold
0 Sell
Strong Buy
Current: 116.930
Low
115.00
Averages
139.07
High
156.00
Current: 116.930
Low
115.00
Averages
139.07
High
156.00
About UAL
United Airlines Holdings, Inc. is a holding company. The Company transports people and cargo throughout North America and to destinations in Asia, Europe, Africa, the Pacific, the Middle East and Latin America. The Company, through United Airlines, Inc., and its regional carriers, operates across six continents, with hubs at Chicago O'Hare International Airport (ORD), Denver International Airport (DEN), George Bush Intercontinental Airport (IAH), Los Angeles International Airport (LAX), Newark Liberty International Airport (EWR), San Francisco International Airport (SFO), Washington Dulles International Airport (IAD) and A.B. Won Pat International Airport (GUM). Its hub and spoke system allow it to transport passengers between a large number of destinations with frequent services. The Company has contractual relationships with various regional carriers to provide regional aircraft service branded as United Express. It provides freight and mail transportation services (Air Cargo).
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Impact on Non-Cardholders: Non-cardholders will earn fewer miles than before, and general members must now hold a United card to earn miles on Basic Economy tickets, which may drive more customers to apply for credit cards to increase their mileage earnings.
- Discount Benefits: Cardholders receive ongoing discounts on award tickets, with general members getting at least 10% off and MileagePlus Premier members at least 15% off, which is likely to enhance customer loyalty and boost overall sales.
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Rising Oil Prices Weigh on United Airlines Stock
- Oil Price Impact: Crude oil prices have surged to six-month highs due to stalled U.S.-Iran nuclear talks, with Brent rising approximately 1.5%, which pressures United Airlines' fuel costs and negatively impacts profit margins.
- Earnings Expectations Downgrade: Fuel represents one of United's largest variable expenses, and as oil prices rise, the airline may need to increase fares or cut capacity, both of which could dampen demand and lower earnings expectations.
- Technical Indicator Analysis: Despite a 3.50% drop to $112.84, UAL remains above its 20-day and 50-day simple moving averages, indicating some short-term strength, with an RSI of 58.23 suggesting a neutral trend.
- Analyst Bullish Outlook: Analysts maintain a positive outlook with an average price target of $135.71, with TD Cowen and UBS raising their targets to $140.00 and $147.00, respectively, reflecting confidence in United's future performance.
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- Redemption Rate Discounts: Cardholders will enjoy at least a 10% discount on award flights, for instance, an economy ticket that costs 15,000 miles will now only require 13,500 miles, enhancing perceived value for cardholders and driving credit card sign-ups.
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- Leadership Transition Challenges: With new CEO John Furner recently taking the helm, investor focus intensifies on the company's future performance, particularly given Walmart's stock has risen over 21% in the past year.
- Market Reaction and Competitive Pressure: Despite Walmart's market cap surpassing $1 trillion earlier this month, investor confidence in future growth is challenged amid increasing competition in the retail sector.
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- Reward Program Upgrade: United Airlines has introduced new features for its MileagePlus program, allowing cardholders to earn significantly more miles on United flights, such as 17 miles per dollar for 1K members using a United Club card, enhancing the earning potential for cardholders.
- Impact on Non-Cardholders: Non-cardholders will earn fewer miles than before, and general members must now hold a United card to earn miles on Basic Economy tickets, which may drive more customers to apply for credit cards to increase their mileage earnings.
- Discount Benefits: Cardholders receive ongoing discounts on award tickets, with general members getting at least 10% off and MileagePlus Premier members at least 15% off, which is likely to enhance customer loyalty and boost overall sales.
- Expanded Seat Availability: United Airlines is expanding access to Saver Award inventory, including previously restricted Polaris business class seats, with general cardholders now able to redeem discounted Polaris Saver awards for as low as 72K miles, further increasing the perceived value for cardholders.
See More
Rising Oil Prices Weigh on United Airlines Stock
- Oil Price Impact: Crude oil prices have surged to six-month highs due to stalled U.S.-Iran nuclear talks, with Brent rising approximately 1.5%, which pressures United Airlines' fuel costs and negatively impacts profit margins.
- Earnings Expectations Downgrade: Fuel represents one of United's largest variable expenses, and as oil prices rise, the airline may need to increase fares or cut capacity, both of which could dampen demand and lower earnings expectations.
- Technical Indicator Analysis: Despite a 3.50% drop to $112.84, UAL remains above its 20-day and 50-day simple moving averages, indicating some short-term strength, with an RSI of 58.23 suggesting a neutral trend.
- Analyst Bullish Outlook: Analysts maintain a positive outlook with an average price target of $135.71, with TD Cowen and UBS raising their targets to $140.00 and $147.00, respectively, reflecting confidence in United's future performance.
See More
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- Enhanced Payment Flexibility: The multi-tender payment solution launched by UATP in partnership with Mica allows merchants to intelligently allocate various payment types within a single transaction, significantly improving payment flexibility and streamlining settlement processes, thereby enhancing operational efficiency.
- Increased Security: Utilizing Mica's patented credential-less tokenization technology, the solution eliminates the risks associated with stored credentials, reducing the likelihood of payment fraud and account takeover attacks, ensuring secure and flexible transaction experiences.
- Multi-Channel Support: The new system supports a wide range of payment forms, including stablecoins and account-to-account transfers, enabling merchants to seamlessly integrate online, in-app, and in-person payments on the UATP platform, addressing diverse customer needs and driving payment innovation.
- Market Demand Response: As the demand for payment optimization grows in the retail and travel sectors, UATP's network-level solution helps merchants modernize their payment infrastructure while maintaining existing acquiring, gateway, and settlement relationships, thereby enhancing their competitive position in the market.
See More
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- Guidance Miss: Walmart's latest earnings report projects adjusted EPS for the fiscal year between $2.75 and $2.85, falling short of Wall Street's $2.96 forecast, resulting in a premarket stock drop of over 2%.
- Challenges Under New CEO: With John Furner taking the helm amid intensifying market competition, investor focus on his strategic direction is increasing, which could impact stock performance.
- Market Performance Review: Despite a recent stock increase of over 21% and nearly 175% over the past five years, the lowered guidance may raise concerns about Walmart's future growth potential among investors.
- Industry Dynamics Impact: On the same day as Walmart's report, Wayfair posted its first annual sales gain, while Etsy's stock rose after beating earnings expectations, indicating a potential pressure on Walmart from the recovering retail sector.
See More
United Airlines Overhauls MileagePlus Program to Reward Credit Card Holders
- Mileage Reward Changes: United Airlines is significantly revamping its MileagePlus program, where credit card holders will earn 6 miles per dollar spent compared to 3 miles for non-cardholders, fundamentally altering the mileage accumulation strategy to incentivize credit card applications.
- Redemption Rate Discounts: Cardholders will enjoy at least a 10% discount on award flights, for instance, an economy ticket that costs 15,000 miles will now only require 13,500 miles, enhancing perceived value for cardholders and driving credit card sign-ups.
- Elite Member Benefits: Cardholders with elite status will receive deeper discounts, such as a long-haul business class seat priced at 200,000 miles being reduced to 170,000 miles, which strengthens loyalty among high-end customers while increasing accessibility to premium seats.
- Basic Economy Policy: Travelers without a credit card will not earn miles on basic economy fares, although elite members retain this benefit, potentially pushing some customers to apply for credit cards to maintain their mileage accumulation capabilities.
See More
Walmart's Guidance Falls Short of Expectations, Shares Drop
- Guidance Miss: Walmart's latest earnings report projects adjusted earnings per share for the fiscal year between $2.75 and $2.85, falling short of Wall Street's $2.96 forecast, resulting in a premarket share drop of over 2%.
- Leadership Transition Challenges: With new CEO John Furner recently taking the helm, investor focus intensifies on the company's future performance, particularly given Walmart's stock has risen over 21% in the past year.
- Market Reaction and Competitive Pressure: Despite Walmart's market cap surpassing $1 trillion earlier this month, investor confidence in future growth is challenged amid increasing competition in the retail sector.
- Other Retail Updates: In contrast, Wayfair reported its first annual sales gain since 2020, while Etsy's shares surged after beating Wall Street's earnings expectations, highlighting the varied performance across the retail landscape.
See More
