On Thursday, Citi reaffirmed its Buy rating on shares of United Continental (NASDAQ:UAL), maintaining a $73.00 price target. The firm highlighted the airline's strong potential for free cash flow generation, which is expected to persist throughout the year.
Citi pointed out that the expected earnings per share (EPS) growth and free cash flow (FCF) generation should contribute positively to United Airlines' stock performance, addressing what Citi perceives as an oversold condition of the shares.
According to the firm, United Airlines' estimated 2024 price-to-earnings (P/E) ratio of 4.6 times stands in stark contrast to the airline's promising outlook for free cash flow. The analyst suggested that the company's prior capital expenditure guidance for 2024, which was approximately $9 billion to $10 billion, might be overstated given the current trends.
Citi's analysis indicates that United Airlines is on a trajectory to bolster its financial health through continued EPS growth and robust free cash flow generation. These factors are seen as key drivers for the stock's recovery, as they may help to rectify the market's undervaluation of United's shares.
Further emphasizing the airline's promising financial prospects, Citi has chosen to add United Airlines to its focus list. This move underscores the firm's confidence in United's ability to sustain its positive financial performance and deliver value to shareholders.
Investors and market watchers alike will be keeping an eye on United Continental's stock as it navigates the dynamics of the airline industry, backed by Citi's optimistic outlook and the addition to the focus list. The price target of $73.00 remains a key figure to watch as the airline strives to achieve the financial milestones laid out by analysts.
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