NEW YORK (TheStreet) -- Shares of United Continental (UAL) - Get Report were gaining in mid-afternoon trading as UBS said it was "encouraged" by the company's optimism that margins would improve following a meeting with United's management, Barron's reports.
United, based in Chicago, said that the company's best-in-class route network should translate into higher margins, the firm noted.
CEO Scott Kirby said he is "comfortable" with the airliner's existing fare structure but mentioned that the company would reconsider an ultra-low cost carrier fare matching policy if necessary, UBS added.
Also, the firm said it views the company's used plane acquisition program as a "clear positive" for its free cash flow outlook, Barron's said.
While United's CFO Andrew Levy did not provide an update on capital expenditures, according to UBS, he said the company "has a lot of flexibility built into its order book."
"We think United Continental can double if it can close its margin gap to peers, but view the stock as approximately 20% undervalued even if relative margin performance doesn't improve," UBS added, according to Barron's.
The firm has a $60 price target on the shares.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rated this stock as a "buy" with a ratings score of B.
The company's strengths can be seen in multiple areas, such as its notable return on equity, attractive valuation levels, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
You can view the full analysis from the report here: UAL