United Airlines Is in Reversal—If the Economy Doesn't Stall

Core Insights - United Airlines is experiencing a trend reversal in stock price after a significant sell-off, with the company outperforming in Q1 and demonstrating effective execution of the United Next plan [3][4][9] - The company anticipates capacity gains, increased revenue per seat mile, and lower fuel costs to drive significant outperformance in 2025, contingent on economic conditions [4][5] - The stock price reached a low in early April, approximately 50% below its recent high, primarily due to tariff-induced fears that have since diminished [6][12] Financial Performance - United Airlines reported a 5.3% revenue growth in Q1, exceeding MarketBeat's consensus, driven by a 4.9% increase in capacity and a 0.5% rise in total revenue per seat mile [9][10] - Basic revenue grew by 7.6%, while premium revenue increased by 9.2%, business revenue by 7.4%, and international revenue by over 5% [9][10] - The company achieved a net income of $0.4 billion, resulting in a 3% margin, with significant free cash flow improvement to $2.3 billion [11] Stock Outlook - The 12-month stock price forecast for United Airlines is $102.01, indicating a potential upside of 52.28% from the current price of $66.99 [12] - Analysts have reset their outlook, with the stock trading at only 6x its earnings outlook, suggesting a deep value opportunity [14] - Institutional buying has increased, with institutions purchasing on balance for seven consecutive quarters, indicating bullish sentiment [15]