United Airlines (UAL) stock closed significantly in the green on April 17 after Iran’s foreign minister declared the Strait of Hormuz fully open to commercial vessel traffic for the duration of the Lebanon ceasefire.
The announcement triggered an immediate collapse in crude oil (CBM26) prices into the 80s.
This helped the airline stock push past its major moving averages (50-day and 200-day), indicating a bullish reversal. Still, United Airlines shares remain down over 13% versus their year-to-date high.
Why Lower Oil Prices Are Bullish for United Airlines Stock
For United Airlines, which operates one of the largest domestic and international networks with heavy long-haul flying and significant daily aircraft utilization, fuel represents one of the single largest operating expenses.
The reopening of the Strait of Hormuz and the subsequent crash in oil prices, therefore, represent a major tailwind for its bottom line.
In the near term, the firm’s earnings on April 21 may also prove a catalyst for UAL stock. Consensus is for the airline to earn $1.08 per share, up nearly 19% on a year-over-year basis.
Unlike its peers, Delta (DAL) and Southwest (LUV), however, United does not currently pay a dividend yield.
UAL Shares Are Relatively Inexpensive to Own
Despite today’s rally, United Airlines stock is going for nearly 12x forward earnings, which makes it relatively cheaper to own than its industry peers (DAL and LUV).
Additionally, UAL’s aggressive capacity expansion and premium cabin focus drive higher margins. The “United Next” plan modernizes the fleet, increasing seats per departure and fuel efficiency.
The company’s leading international gateway structure also captures high-yield corporate travel demand more effectively than its domestic-centric competitors.
Speculation around a potential merger with American Airlines, reportedly discussed with senior government officials, adds another dimension to the investment case.
How Wall Street Recommends Playing United Airlines
Investors could also take heart in the fact that Wall Street remains bullish as ever on United Airlines for the remainder of 2026.
The consensus rating on UAL shares sits at a “Strong Buy” currently, with the mean price target of $129.50 indicating potential upside of more than 25% from here.
This article was created with the support of automated content tools from our partners at Sigma.AI. Together, our financial data and AI solutions help us to deliver more informed market headline analysis to readers faster than ever.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
More news from Barchart
- Only 3 Dividend Kings Passed This Brutal Screen. They Could Pay You Well for Years to Come.
- United Airlines Stock Is Flying Higher as Strait of Hormuz Opening Promises to Lower Jet Fuel Prices. Should You Buy It Here?
- As Critical Metals Ups Its Stake in Greenland Rare Earths, Should You Buy CRML Stock Today?
- Why Many (or Most) of Your Stock Picks Have Not Been Successful
