By Sam Boughedda
Citi opened a 30-day catalyst watch on United Airlines (NASDAQ:UAL) on Wednesday, telling investors the recent sell-off in the stock has created additional value.
United Airlines shares are down over 20% in the last month after falling from a high of around $55 in the first week of March to $42.50 currently.
Citi analysts, who have a Buy rating and $65 price target on UAL shares, said that although the stock has outperformed this year, the recent slide seems to be down to factors such as its weak first-quarter earnings guide, the risk-off sentiment that may have stemmed in part from concerns about regional banks, and more recently from this week's crude oil spike.
However, they said despite the headwinds, UAL looks oversold as the carrier "looks set to grow earnings this year and next – and such growth looks substantial."
"With a view at upcoming 1Q results, a modestly good 2Q guide, and the carrier maintaining a strong 2023 guide, we think United could recoup lost ground over the next month," the analysts wrote.
"Citi sees United's ca. 22% share price over the last month as excessive," they added. "The company's mid-March guidance adjustment had already seemed to at least partially bake in expectations for higher pilots' pay, as well as lower 1Q seasonality. Although this week's surprise crude oil production cut appears to have pressured the shares, the oil price jump could be a temporary overshoot."