Stock undervalued with $57 fair value estimate
Stock undervalued as we bump up fair value to $19.50 on higher near-term profitability targets.
Management highlighted that demand trends have improved significantly, particularly for international travel.
We are reducing our fair value estimate as we incorporate the effects of significantly higher near-term fuel prices into our model.
We believe it is worthwhile to reconsider the effects of the war on global defense budgets and defense prime contractor valuations
No-moat-rated American Airlines restored its network to a greater extent than peers during the fourth quarter but increased fixed cost utilization has not brought operating margins above zero just yet.
No-moat-rated United Airlines UAL posted a solid fourth quarter that met the firm’s pre-omicron variant guidance. We increase our fair value estimate to $57 per share from $55 to reflect Morningstar’s updated assumption that corporate tax increases will not occur.
Shares have struggled lately, but Morningstar’s analyst sees three big opportunities to drive growth.
Continued pandemic fears have mispriced the risk in Delta and Southwest.
Lighter-than-expected 737 MAX deliveries indicate that demand is somewhat softer than we had previously expected.
We still think the shares are undervalued.
We are increasing our fair value estimate after no-moat-rated Delta reported decent third-quarter earnings.
We are raising our fair value estimate for Boeing to $260 per share from $257 as we raise our near-term targets for the defense business this year and we decrease our near-term working capital estimates.
We are slightly decreasing our fair value estimate.
We are decreasing our fair value estimate for the firm by about 4.5% to $52.50 per share from $55 to account for Morningstar’s assumption of higher corporate taxes in the model and as we increase our near-term assumptions on fuel expense considerably to reflect higher oil spot prices.
We are maintaining our fair value estimate for the wide-moat company.
We increased our fair value estimate for the wide-moat company.
We are maintaining our fair value estimate, but we have raised our expectations for operations.
We’re lowering our fair value estimate, implying that Boeing’s commercial deliveries do not sustainably reach 2018 levels until 2025.
No-moat-rated Delta reported a challenging fourth quarter to end 2020, as the pandemic continues to dramatically reduce air travel demand. Despite the pandemic, we continue to see clear reasons to expect a resounding recovery post-vaccine in both leisure and business travel. We are maintaining our $43 per share fair value estimate for Delta.
This is a critical step in our bullish thesis on Boeing, but it’s only the first in a series of steps in the company’s turnaround.
We are slightly reducing our fair value estimate for Boeing to $260 per share from $264 as management indicated they do not expect to return to free cash flow positivity until 2022 due to a buildup of 787 inventory.
We are slightly reducing our fair value estimate for the wide-moat company as management indicated they do not expect to return to free cash flow positivity until 2022.
We are modestly raising our fair value to $43 per share from $42.50 after adjusting our model for quarterly results. We see the stock as the best value in our U.S. airline coverage.
We lower our fair value estimate for the company as it awaits its MAX re-entry and a better environment.
We are reducing our fair value estimate to $14.50 per share from $15, and we remind investors we think that American Airlines' considerable financial leverage widens the dispersion of potential equity values relative to peer airlines.
The no-moat firm was ravaged by coronavirus in the second quarter.
We maintain United's no-moat rating and fair value estimate despite second quarter performance.
No-moat-rated Delta reported a difficult second quarter, and our fair value estimate for the stock is $42.50 per share.
Wide-moat Boeing reported a difficult first quarter as the firm weathers two concurrent challenges, but we’re maintaining our fair value estimate for the firm.
We are reducing our fair value for Southwest Airlines as we incorporate a somewhat more bearish 2020 into our forecast.
Overall, while we agree that near-term headwinds are fierce, we continue think that there are long-term tailwinds for the firm.
We are reassessing our key valuation assumptions for United, Southwest, Delta, American, and Air Canada in the wake of the coronavirus outbreak.
The wide-moat firm continues to deal with the grounding of the 737 MAX, and we're slightly lowering our fair value estimate.
We view Boeing’s updated return to service estimate of mid-2020 as reasonable, assuming no as-of-yet unknown problems are discovered.
As this change in leadership does not affect our free cash flow assumptions, we are maintaining our $349 fair value estimate.
We still believe the company’s wide moat offers structural protection, though.
Six of the top 10 conviction purchases are undervalued.