What Happened?
Shares of airline company United Airlines Holdings (NASDAQ:UAL) fell 3.2% in the afternoon session after Wolfe Research lowered its price target on the stock, adding to underlying concerns about soft passenger demand.
The research firm adjusted its price target on United Airlines to $115 from $117, though it maintained its Outperform rating. This move highlighted worries about the airline's weak growth in revenue passenger miles, a key measure of demand. The company's performance in this area was described as underwhelming, suggesting it might face challenges accelerating growth without hindering profitability. This negative sentiment overshadowed a more positive development where the Federal Aviation Administration (FAA) lifted flight restrictions that had been in place following a government shutdown.
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What Is The Market Telling Us
United Airlines’s shares are very volatile and have had 25 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock gained 5.2% on the news that investors continued to pile into value-oriented names amid growing valuation concerns. This shift reflected growing caution over high valuations within the technology and artificial intelligence (AI) spheres. As market participants reassessed risk, they reallocated capital from growth-heavy indices, like the Nasdaq, to companies in areas like industrials and financials, perceived to be more reasonably priced. Contributing to the positive momentum, markets remained hopeful that a prolonged 40-day government shutdown would be over. The U.S. Senate approved a compromise funding package, which was pending a vote in the House. The potential end to the shutdown brought a sense of relief to markets.
United Airlines is down 4.7% since the beginning of the year, and at $90.90 per share, it is trading 17.8% below its 52-week high of $110.52 from January 2025. Investors who bought $1,000 worth of United Airlines’s shares 5 years ago would now be looking at an investment worth $2,239.
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