Why United Airlines Stock Is Flying Higher After Earnings

airplane taking off from runway — (Image credit: Getty Images)

United Airlines (UAL) stock is flying higher Wednesday after the company beat analysts' top- and bottom-line estimates for its first quarter.

In the three months ended March 31, United's total operating revenue increased 9.7% year-over-year to $12.5 billion while its per-share loss narrowed to 15 cents from 63 cents in the year-ago period.

However, it added that its first-quarter results reflected an impact of approximately $200 million from the grounding of the Boeing 737 MAX 9. Without this impact, the company said it would have reported a quarterly profit.

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United's results exceeded analysts’ expectations, which called for revenue of $12.45 billion and a loss of 57 cents per share, according to CNBC.

The results also beat the guidance United provided for the first quarter, which called for a loss of 35 cents to 85 cents per share.

As a result of its strong performance in the first quarter, United reiterated its full-year forecast for EPS to arrive between $9 and $11.

"I want to thank the United team for working so hard this quarter to deliver strong operational metrics for our customers and sharpen our focus on safety, while producing excellent financial results for our shareholders," United Airlines CEO Scott Kirby said in a statement. "We've adjusted our fleet plan to better reflect the reality of what the manufacturers are able to deliver. And, we'll use those planes to capitalize on an opportunity that only United has: profitably grow our mid-continent hubs and expand our highly profitable international network from our best in the industry coastal hubs."

For the second quarter, United expects earnings in the range of $3.75 per share to $4.25 per share, which exceeds the consensus analyst estimate of $3.71 per share.

Analysts see more upside for UAL stock

Analysts are overwhelmingly bullish on the industrial stock. According to S&P Global Market Intelligence, the consensus analyst target price for UAL stock is $62.46, representing an upside of more than 30% from current levels. Additionally, the consensus recommendation is Buy.

Speaking for the bulls is Argus Research analyst John Staszak, who maintained a Buy rating on United Airlines stock after earnings.

"We expect demand for air travel to continue its post-pandemic recovery, with strong growth in international travel, and look for higher revenues to outweigh inflationary headwinds," Staszak says. "We also expect the company to benefit from constrained industry capacity due to the grounding of the Boeing 737 MAX 9."

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.