Further downside is in store for United Airlines with a potential economic slowdown ahead, Susquehanna Financial Group says. Analyst Christopher Stathoulopoulos downgraded shares of the airline to neutral from positive in a note to clients Monday, saying that he expects headwinds mentioned by management last week will likely worsen, especially with a likely downturn on the horizon. “When unpacking UAL’s `repackaged’ FY23 pretax margin guide, we believe that the operating headwinds outlined by UAL could get worse before they get better, with the potential for an economic slowdown into 2023 putting additional pressure on what we believe is an unrealistic FY23 ASM guide, and consensus estimates that are too high,” he wrote. To reflect these concerns, Stathoulopoulos lowered Susquehanna’s price target on United by 19%, to $35 a share from $43, and reduced EPS estimates. The fresh price target implies nearly 4% downside from Friday’s closing price. Shares of United Airlines have fallen 17% this year and sit about 33% off a 52-week high of $54.52. “While we continue to rank CEO Scott Kirby at the top of our coverage in terms of execution (‘extreme ownership’ mindset), and do see United Next as a viable strategy into mid-decade, against an increasingly fragile operating backdrop, we see better risk-reward in peer DAL,” Stathoulopoulos said. — CNBC’s Michael Bloom contributed reporting.
