"Jefferies lowered its target from $148 to $125 after raising Q1 fuel cost estimates by about 14% and Q2 estimates by about 30% following a roughly 50% spike in jet fuel prices from the January average. The key to the bull case: Jefferies currently assumes second-half fuel prices revert toward pre-conflict levels, which would allow United's earnings power to reassert itself."
"Premium revenue grew 11% and loyalty revenue grew 9% in full-year 2025, both outpacing overall revenue growth of 3.52%. These high-margin streams are structurally less sensitive to fuel volatility."
"With FY 2026 adjusted EPS guidance of $12.00 to $14.00, the valuation math remains compelling at a forward P/E of roughly 7x. Fuel cost normalization in H2 2026 hinges on oil prices retreating as geopolitical pressures ease."
United Airlines shares have experienced substantial declines, down 24% year-to-date as of March 12, driven primarily by elevated fuel costs. Jefferies lowered its price target from $148 to $125 after raising fuel cost estimates following a 50% spike in jet fuel prices, but maintains a Buy rating based on the assumption that second-half 2026 fuel prices will revert toward pre-conflict levels. The bull case relies on fuel cost normalization allowing United's earnings power to reassert itself, with FY 2026 adjusted EPS guidance of $12.00 to $14.00 supporting a compelling 7x forward P/E valuation. Key growth drivers include premium revenue growth of 11% and loyalty revenue growth of 9% in 2025, both outpacing overall revenue growth and providing high-margin revenue streams less sensitive to fuel volatility. United's planned fleet expansion with over 100 narrowbody and 20 Boeing 787 widebody deliveries in 2026, combined with new international routes and hub upgrades, positions the airline for long-term earnings growth.
Read at 24/7 Wall St.
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