Deutsche Bank analyst Michael Linenberg reduced his rating to hold from buy. “We are lowering our ratings to hold on most of our buy-rated U.S. airline stocks (AAL, ALK, DAL, JBLU, SAVE and UAL), as it is becoming increasingly more likely that the spread of Covid-19 will disrupt travel patterns beyond China,” he wrote in a report.
“We are also concerned that the coronavirus crisis will start to negatively impact peak travel periods such as spring break, Easter travel and early summer, which we believe is already starting to manifest itself in lower booking trends,” the analyst added.
Corporate travel restrictions also are a problem, Linenberg said.
Daniel McKenzie, an analyst at Buckingham Research, downgraded United Airlines to neutral from buy and lowered his share-price target to $61 from $105.
“Earnings uncertainty surrounding the coronavirus is too great for us to quantify, and given the number of potential scenarios, we’re uncomfortable with our full year estimate, but are comfortable there’s downside, hence the reset of our valuation multiple,” he wrote in a report.
His forward price-earnings-ratio estimate is 5.5, down from 9.5 previously.
“With the Covid-19 spreading, it’s unclear what our 2020 EPS will ultimately look like, but it could look closer to $5-$8/share,” McKenzie said.
The coronavirus has so far killed 2,180 people and infected more than 82,500, accorinfg to Johns Hopkins CCSE.
At last check, United shares traded at $63.65, down 4.33%.