The U.S. Global Jets ETF rallied 12% over three sessions on Middle East peace hopes, but UBS warns the sector may consolidate without stronger earnings expectations. UBS highlights United Airlines as best positioned for a potential 12% valuation gain if its P/E premium to Delta narrows.
The U.S. Global Jets ETF has surged 12% in the past three trading sessions, fueled by optimism over a potential resolution to the Iran conflict and the reopening of the Strait of Hormuz. Investors have poured into airline stocks on hopes that easing geopolitical tensions will support travel demand and industry recovery.
UBS warns that recent valuation gains have outpaced fundamentals and that the sector could enter a consolidation phase unless companies deliver upward earnings revisions in upcoming reports. The firm notes that macroeconomic and geopolitical volatility is normalizing, shifting investor focus toward second-quarter results and forward guidance.
Based on 2027 estimates, UBS deems most major carriers’ valuations fully valued, with P/Es ranging from 7× to 10.5×, but identifies United Airlines as having room for upside. UBS projects United’s stock could gain about 12% if its P/E premium over Delta Air Lines narrows toward historical levels.
