United Airlines ( NASDAQ: UAL ) share slipped shortly after Monday’s market open after Susquehanna downgraded the stock due to a deteriorating macroeconomic backdrop and and an “unrealistic” forecast offered on earnings day.
Equity analyst Christopher Stathoulopoulos advised that the consensus estimates after earnings remain stubbornly elevated and set the stock up to disappoint in 2022. As such, he indicated a move to a “Neutral” rating from a previous Buy-equivalent was in order.
“When unpacking UAL’s “repackaged” FY23 pretax margin guide, we believe that the operating headwinds outlined by UAL could get worse before they get better, with the potential for an economic slowdown into 2023 putting additional pressure on what we believe is an unrealistic FY23 ASM guide,” he told clients. “While we continue to rank CEO Scott Kirby at the top of our coverage in terms of execution and do see United Next as a viable strategy into mid-decade, against an increasingly fragile operating backdrop, we see better risk-reward in peer [Delta Air Lines] ( DAL ).”
Stathoulopoulos cut his price target from $43 to $35 alongside the downgrade. Shares of the Chicago-based air carrier fell 2.27% shortly after the market open.
Read more on the details of the airline’s latest earnings release .
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United Airlines downgraded at Susquehanna due to macro pressure, over-optimistic forecast