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The Ratings Game: United Airlines’ ‘impressive top line’ and ‘earnings power’ cited by analysts after fourth-quarter beat and upbeat guidance

United Airlines Holdings Inc.’s fourth-quarter results and its earnings potential are being lauded by analysts after the company successfully navigated the disruption caused by winter storm Elliott. 

The carrier reported fourth-quarter earnings that beat Wall Street’s expectations late Tuesday. United Airlines
UAL,
-1.92%

said it managed well through severe winter weather disruptions in late December and gave optimistic guidance.

Lifted by the results, United Airlines’ stock rose premarket Wednesday before falling 2.8% after market open.

Also see: United Airlines swings to profit despite ‘worst’ winter storm, issues blue-sky guidance

“Our throughput estimates for United indicated a strong end to the December quarter driven by strength in San Francisco and Chicago O’Hare,” said Cowen analyst Helane Becker in a note released Wednesday. “United was not immune to cancellations, but they were a smaller portion of their flights relative to Southwest, Alaska, Allegiant, and others.”

Southwest Airlines Co.
LUV,
-2.05%

canceled more than 16,700 flights from Dec. 21 through Dec. 31, which the carrier estimates will reduce earnings by $725 million to $825 million.

Becker wrote that Cowen expected bullish guidance from United, citing the large divergence between consensus capacity estimates and first-quarter scheduled capacity, as well as Delta Air Lines Inc.’s
DAL,
+1.20%

commentary on the transatlantic market last week. “We remain excited by the earnings power of United in this environment and reiterate our Outperform rating,” she added.

Also read: These numbers make Delta Air Lines’ stock the best bet among U.S. carriers for 2023 and 2024

“The beat was largely due to an impressive top line,” wrote Raymond James analyst Savanthi Syth in a note released Wednesday.

United Airlines’ stock has risen 12.2% in the last 12 months, compared with the S&P 500’s
SPX,
-0.85%

decline of 12.6% and the U.S. Global Jets ETF’s
JETS,
-0.62%

decline of 7.9%.

United Airlines’ fourth-quarter results and bullish guidance lifted other airline stocks premarket Wednesday, but most pulled back after market open. American Airlines Group Inc.’s
AAL,
-1.11%

stock was down 1.4% and Southwest Airlines Co.
LUV,
-2.05%

fell 2.2%, although Delta Air Lines Inc. rose 0.5%. Alaska Air Group Inc.’s
ALK,
+0.08%

stock fell 0.5%, JetBlue Airways Corp.
JBLU,
-0.36%

fell 0.8% and Allegiant Travel Co.
ALGT,
-0.74%

fell 1.2%. The U.S Global Jets ETF fell 0.8%.

Now read: Watch these airlines in 2023, says Raymond James

Of 20 analysts surveyed by FactSet, 13 have an overweight or buy rating, five have a hold rating and two have a sell rating for United Airlines.

Additional reporting by Claudia Assis and Tomi Kilgore.

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