Goldman Adjusts Outlook on Airline Stocks UAL and SAVE

Most analysts are upbeat on both UAL and SAVE

by Josh Selway

Published on Jun 6, 2019 at 10:36 AM

Analysts at Goldman Sachs weighed in with opposing views on airline names United Continental Holdings Inc (NASDAQ:UAL) and Spirit Airlines Incorporated (NYSE:SAVE). Let's take a look at how shares of UAL and SAVE are trading in response.

UAL was upgraded to "buy" from "neutral" at the brokerage firm, while the analyst maintained its $108 price target. This aligns Goldman with the general opinion on the Street, where 11 of 15 analysts recommend buying the stock. Moreover, the average 12-month price target of $104.76 represents a roughly 25% premium to the current price of $83.24.

United Continental's chart is quite interesting, as the shares have bounced from the $78 area on multiple occasions in the past year, and today it's testing the 50-day moving average. Recent options traders will be hoping this closely watched trendline acts as resistance, since put buying has been popular. Specifically, the 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 1.22 and ranks in the 84th annual percentile.

SAVE stock, meanwhile, was cut to "neutral" from "buy" and its price target was cut to $60 from $69. As such, the shares have fallen 0.7% to $50.10. More broadly, most analysts are bullish on the discount airline name, with nine of 12 handing out "strong buy" recommendations.

As for options activity, near-term speculators are heavily call-skewed, based on the Schaeffer's put/call open interest ratio (SOIR) of 0.28, which sits in the 1st annual percentile. This is due in part to big open interest at the June 52.50 and 55 calls.

 


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