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United Airlines stock hits 1-year high; Why is UAL rallying?

United Airlines stock hits 1-year high; Why is UAL rallying?

United Airlines (NASDAQ: UAL), the third-largest carrier in the United States, has made a remarkable comeback in the stock market following a challenging period during the COVID-19 pandemic. 

Despite enduring a steep downturn and undervalued stock prices, the airline has staged an impressive recovery, capturing the attention of investors and demonstrating its resilience in the face of adversity.

At the market open on Tuesday, June 27, the airline’s stock upheld that momentum, rising to a new 52-week high.

UAL 1-year price chart. Source: Finbold

United Airlines stock price analysis

At press time, shares of United Airlines were changing hands at $55.39, up 3.88% on the day, marking the stock’s highest level in 12 months.

UAL 1-day price chart. Source: Finbold

Over the past month, UAL gained more than 15%, and over 43% since the start of 2023.

What is driving the UAL stock price rally?

Put simply, shares of United Airlines are on the rise because the company continues to deliver remarkable financial performance after a catastrophic run during the coronavirus pandemic.

While the company’s earnings reports have been mixed, its sales have grown over the past seven quarters. In Q1, United’s sales surged by 51% year-over-year to $11.4 billion, while a loss per share of 63 cents marked a drastic improvement from a $4.24 loss per share in the year-ago quarter. 

In addition, United secured a record operating cash flow of $3 billion in the three-month period and saw the lowest seat cancellation rate for Q1 since 2012. 

United’s CEO, Scott Kirby, said the company experiencing a significantly robust demand, particularly in leisure and premium categories. On the other hand, business demand is yet to catch up. 

“Leisure demand is really, really strong. Premium leisure demand is much higher. Business demand hasn’t fully recovered yet … that’s taking more time.”

– he said.

Earlier this year, United Airlines forayed into the electric vertical takeoff and landing (eVTOL) industry after inking a deal with eVTOL aircraft maker Archer Aviation. The partnership could serve as an additional upside catalyst for UAL shares and improve the stock’s future prospects. 

Raymond James analysts keep ‘outperform’ rating on UAL

In the wake of its stock market rally, an analyst at the investment banking firm Raymond James reiterated their ‘outperform’ rating on UAL.

The financial expert also hiked the price target on the stock from $64 to $72, implying a possible upside of around 35% from the current price. 

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