UBS warns US airline stocks need upward earnings revisions to sustain a 12% rally after JETS ETF soared over three sessions as Middle East tensions ease. Based on 2027 estimates, United Airlines trades at 8.5x earnings versus Delta’s 10.5x, suggesting up to 12% further upside if valuation gaps narrow.
UBS states that recent 12% gains in the JETS ETF over three sessions reflect easing Middle East tensions and valuation expansion, but warns that a shift back to fundamentals will require upward earnings revisions to sustain further gains.
Based on 2027 consensus estimates, Delta trades at 10.5x earnings, Southwest at 10x, United at 8.5x, American at 7x, Air Canada at 10.5x and Alaska at 8x, indicating United and Alaska may still possess valuation upside.
UBS notes consensus second-half RASM forecasts imply a demand slowdown, but industry checks show stable traffic trends, which alongside lower fuel costs could support higher RASM and earnings revisions, with United potentially gaining an additional 12% if its P/E gap with Delta narrows.
