NEW YORK (TheStreet) -- Shares of United Continental Holdings (UAL) are sinking, down 4.07% to $51.89 in early market trading Monday, after analysts at Raymond James lowered their rating on the airline earlier this morning.
The firm downgraded United to "outperform" from "strong buy," saying it expects weaker than expected U.S. economic growth, along with softer than expected international demand.
Analysts at Raymond James also cut their price target to $69 from $82 on muted pricing recovery.
Chicago, Ill.-based United Continental Holdings is a holding company operating under its subsidiaries United Air Lines and Continental Airlines.
The company transports people and cargo through its mainline operations, and has contractual relationships with various regional carriers to provide regional jet and turboprop service branded as United Express.
Separately, TheStreet Ratings team rates UNITED CONTINENTAL HLDGS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNITED CONTINENTAL HLDGS INC (UAL) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, notable return on equity, good cash flow from operations and compelling growth in net income. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- UNITED CONTINENTAL HLDGS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, UNITED CONTINENTAL HLDGS INC increased its bottom line by earning $2.79 versus $1.30 in the prior year. This year, the market expects an improvement in earnings ($10.94 versus $2.79).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Airlines industry and the overall market, UNITED CONTINENTAL HLDGS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has significantly increased by 162.96% to $1,825.00 million when compared to the same quarter last year. In addition, UNITED CONTINENTAL HLDGS INC has also vastly surpassed the industry average cash flow growth rate of 75.22%.
- UAL, with its decline in revenue, slightly underperformed the industry average of 3.2%. Since the same quarter one year prior, revenues slightly dropped by 1.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: UAL Ratings Report