Bernstein sees improved setup for U.S. airline stocks, raises targets

May 14, 2025 12:39 AM AEST | By Investing

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Bernstein sees improved setup for U.S. airline stocks, raises targets — Image source: Kalkine Media

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Investing.com -- Barclays raised its price targets and estimates for several major U.S. airline stocks following better-than-expected first-quarter results and signs of booking stabilization.

The firm cited “double-digit 1Q adj diluted EPS beats across the Big 4 US Airlines” and less macroeconomic drag than previously feared.

It’s ”time to turn the seat belt sign off,” Barclays (LON:BARC) analysts wrote, noting that updated company guidance and booking trends “pointed to stabilization” and a more favorable outlook for the second quarter.

The firm increased its full-year 2025 earnings forecasts and price targets for United Airlines, American Airlines (NASDAQ:AAL), and Delta Air Lines (NYSE:DAL), citing stronger-than-expected first-quarter performance and “some evidence of booking stabilization, corporate not a total bust, capacity rationalization efforts, better revenue management strategy deployment, lower fuel prices, [and] evidence of premium / international / card spend / loyalty revenue generally holding up.”

Barclays now sees UAL rising to $105 from $84. AAL’s price target was lifted to $15 from $12, while DAL’s was increased to $61 from $56. Southwest Airlines (NYSE:LUV), which remains under pressure due to its heavy domestic exposure and lack of premium offerings, saw its target raised modestly to $31 from $27.

While domestic leisure demand showed signs of softening early in the year, “premium bookings, loyalty revenue (e.g. card spend), and international demand remained strong,” benefiting carriers with broader exposure beyond U.S. leisure travel, said Bernstein.

Barclays concluded the outlook remains “better but still not great,” though the firm sees “less macro concern and associated demand fallout” supporting a more constructive stance on the group.

This article first appeared in Investing.com

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