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Will United Airlines shares continue to rise?

United Airlines (NASDAQ: UAL) and other airlines are among the most popular airlines with economic recovery.

April 21, 2021

4 minutes of reading

This story originally appeared on MarketBeat

United Airlines (NASDAQ: UAL) and its other airlines have been among the most popular economic recovery roles. We have seen some Aviation stocks take off in the past year in the hope of a normal travel environment, or at least better ahead.

Investors fortunate enough to buy in one of the two United Airlines discounts to below $ 20 in March 2020 and May 2020, made some substantial returns. But those who miss the chance to buy stockpiled peanuts may wonder if it’s too late to position themselves.

Going into the first report of the new year, United Airlines had a large number of investors wondering if stocks would start to rise in price too soon.

What is the financial situation of United Airlines 2021 in Q1?

The market is preparing for another big loss as United Airlines reported its first quarter results and that has been received. Unfortunately, the net loss of $ 7.50 per share is much lower than consensus expectation of a $ 7.02 loss per share. It’s a tough environment to gauge travel needs, revenue, and costs, but the numbers are lousy in any way you cut.

Revenue fell 66% to $ 3.2 billion, and also fell short of Street forecasts. It also sits at the lower level of management guidance 65% to 70%. The revenue drop is especially discouraging as it shows no improvement from 2020’s 65% revenue drop.

One thing that is noteworthy in its first quarter report was the return to positive territory in cash flows in March 2021. This is a reflection of the spike in bookings as people continue to buy seats to reserve. Guess the sky is full of smoke ahead. Daily burns fell to $ 9 million in the first quarter from $ 19 million in the fourth quarter.

Is the market going too far ahead of the rebound of the airline industry?

The management of United Airlines has made it clear Travel demand is coming back online on the big road. It should be noted that leisure travel demand is higher than pre-pandemic levels in some markets. But while undoubtedly, COVID-19’s limitations have created a huge sphere of pent up travel demand globally, but this translates into revenue and profits coming soon. star.

The market had certainly stabilized before United Airlines and other airlines were financially efficient. However, as we learned this week, boarding before you boarding shows the investor some quarterly results and stock price volatility.

A lot of weight also seems to be placed on a company’s ability to execute its turnaround plan. This includes moves like restricting aircraft capacity to comply with government regulations and soliciting consumer sensitivities over availability these days. It also included a $ 2 billion cost reduction plan and brought the company back to its pre-pandemic operating profit margin. This will be a particularly challenging target as fuel prices rise. Overall, these initiatives have visual implications but still have a lot of performance.

While the market is looking to the future, it can also be impatient. Merchants have effectively granted United Airlines advance credit for their transition plans on the assumption that seats will soon be filled with eager business and leisure travelers. But the longer these expectations do not materialize, the investors can get upset and move their money elsewhere. This could be how 2021 plays out for shares of United Airlines.

Is the United Airlines Pullback an Opportunity to Buy?

In response to the first quarter report, shares of United Airlines were in sell-off mode and come back close to $ 50. Was this simply an overdue correction for a stock that has more than doubled? three times its March 2020 low or could it be a sign of much turmoil ahead?

Technical analysis was mixed and showed no overwhelming signals in either direction. The relative strength indicator fell below 20 and April 20order A good bearish candlestick pattern outside the lower Bollinger band indicates oversold conditions. On the other hand, trading volume above the red averages and the lack of support from the 50-day moving average are ominous signs.

Visibility of 10,000 feet from seller analyst Also on the map. So far, only one company has participated since that first quarter report was Raymond James, who reiterated his ‘buy’ rating. There is a wide range of ranking targets and prices range from $ 32 to $ 74. It will be interesting to see if these targets will be cut after this week’s deflation report.

So, without any overly excited signals from technical or fundamental analysis, investors should stay on the sidelines when it comes to United Airlines shares. Once there is confirmation of the easing of travel restrictions and a healthy financial position, it will be a better time to climb even as the stock moves higher. Until then, sit back and enjoy the bumpy ride that’s the airline space.

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