Airline Stock Upgraded on Recovery Outlook

Analysts are still plenty bearish on the equity

Deputy Editor
Apr 16, 2021 at 10:39 AM
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The shares of United Airlines Holdings Inc (NASDAQ:UAL) are flat this morning, trading at $56.13 at last check, brushing off an upgrade from Argus to "buy" from "hold." The firm cited United Airlines' plans to limit capacity and reduce structural costs, furthermore, the analyst in coverage called it "undervalued," noting the projected recovery in flight demand. Meanwhile, Cowen and Company raised its price target to $65 from $53. 

Out of the gate this morning, United Airlines stock initially traded as high as $56.94. UAL has faltered a bit from its March 18 annual high of $63.69, though the 40-day moving average appears to be swooping in as support. Year-to-date, the equity is still up 30%. 

There is still plenty of room for upgrades amongst the brokerage bunch. Coming into today, five of the 13 analysts in coverage carried a "buy" or better rating, with the remaining eight a "hold" or worse. 

The options pits, on the other hand, have been looking much more bullish. The security's 50-day call/put volume ratio of 3.61 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 98% of readings from the past year. 

Now looks like a good time to weigh in with these options. The stock's Schaeffer's Volatility Index (SVI) of 48% stands higher than 3% of readings in its annual range, implying that options players are pricing in low volatility expectations at the moment.



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