Strong Execution and Favorable Industry Fundamentals Support United Airlines’ Bullish 2023 Outlook

United Airlines’ financial performance improved throughout fiscal 2022, and the no-moat-rated airline finished the year with a strong fourth-quarter performance that topped FactSet consensus revenue and EPS estimates. Furthermore, the airline issued better-than-expected fiscal 2023 financial guidance. Notably, management expects the airline will achieve about a 9% pretax margin in 2023 with EPS of $10.00-$12.00. Previously, we had projected it would take the airline several years to achieve this level of profitability. After updating our valuation model to account for stronger near-term financial performance, we’ve raised our fair value estimate approximately 4% to $59 per share.