Why United Continental Holdings Inc. Shares Could Level Off

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of United Continental Holdings Inc.  (NYSE: UAL  ) slipped about 1% this morning after Imperial Capital downgraded the airline giant from outperform to in line.

So what: Along with the downgrade, analyst Bob McAdoo lowered his price target from $55 to $47, representing about 12% worth of upside to Wednesday's close. So while contrarian traders might be attracted to United's year-to-date price sluggishness, McAdoo's call could reflect a sense on Wall Street that its growth prospects are just too limited to trigger a significant spike. 

Now what: According to Imperial, United's risk to reward trade-off isn't too attractive relative to other airline operators. "[W]e expect operating results to continue to lag peers," McAdoo said. "1Q14 pre-tax earnings also lagged both Delta Air Lines and American Airlines Group by approximately $1bn each. Over the next several quarters, we expect shares of UAL to continue to lag the share performance of DAL and AAL much as they have year to date." Given Jefferies' solid stock-picking track record -- currently ranked in the top 10% of our CAPS community -- United bulls should consider that possibility betting too heavily on a turnaround. 

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 30, 2014, at 6:45 AM, Eliot41 wrote:

    United is still having trouble with it's crew scheduling system. It's overloaded and malfunctioning resulting in flights not scheduled with crews and no one knows they're not scheduled. It added block hours for June and is lacking flight attendants and pilots to cover the increase. Ask any employee and they will tell you the airline is in disarray.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3009314, ~/Articles/ArticleHandler.aspx, 8/28/2015 3:15:00 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Brian Pacampara

I take a look at big 10% moves, as well as stock-shaking analyst calls, on a daily basis for The Fool. While I don't believe in active trading, closely monitoring Mr. Market's mood swings can help identify long-term opportunities.

Today's Market

updated Moments ago Sponsored by:
DOW 16,620.56 -34.21 -0.21%
S&P 500 1,984.74 -2.92 -0.15%
NASD 4,820.60 7.89 0.16%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 2:59 PM
UAL $57.16 Up +3.80 +7.11%
United Continental… CAPS Rating: **