United Airlines Could Gain 12% From P/E Reversion as Jet Fuel Falls 13%
UAL•UBS projects a narrowing of United's 2x P/E discount to Delta based on 2027 estimates, which could boost United's stock by 12%. Jet fuel prices plunged 13% in three sessions, 40% below April peaks, supporting higher earnings revisions and multiple expansion.
1. Valuation Gap and Upside Potential
United currently trades at a 2x P/E discount to Delta on 2027 estimates, a gap last seen in 2014–2015. Forecasts suggest this discount could shrink, potentially driving United's stock 12% higher through multiple expansion.
2. Jet Fuel Price Impact
Jet fuel prices fell 13% over three sessions and sit 40% below April peaks, lowering United’s operating costs and boosting 2027 EPS sensitivity.
3. Earnings Revisions and Multiple Expansion
Upward earnings revisions will be needed to trigger the next leg of growth, while reduced concerns over leveraged M&A should clear the path for valuation expansion.
4. Travel Demand Outlook
Consensus assumes a late-year travel demand slowdown, but consumer appetite has remained resilient, supporting revenue per available seat mile stability through the second half.
