Analyst Sees Downside Ahead For United: Should Traders Buy This Rival Airline Stock Instead?

United Airlines Holdings Inc UAL is moving higher with the rest of the airlines Tuesday as slowing COVID-19 cases add to reopening optimism. Wolfe Research assumed coverage on the airlines today, but the analyst firm highlighted United as the laggard of the group.

What Happened: Wolfe Research analyst Scott Group assumed coverage on the U.S. airlines with a Market Overweight sector rating.

Group expects the airline stocks to shift from COVID-19 losers to reopening winners. The Wolfe Research analyst lowered his earnings estimates for the airlines in general, citing rising oil and jet fuel costs, but United was the only stock he initiated with an Underperform rating.

Group slapped a $41 price target on United, with the stock trading around $50 per share. 

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Sethi's Take: "I own this one and I own Delta Air Lines Inc DAL," Douglas C. Lane & Associates' Sarat Sethi said Tuesday on CNBC's "Fast Money Halftime Report."

United has more exposure internationally, Sethi said, adding that United shares are likely trading higher on global reopening optimism. 

Russia announced Tuesday that it would be pulling troops from the Ukrainian border, which could be contributing to the move today as well. 

Sethi generally agreed with Wolfe Research's outlook. Despite today's move, he told CNBC that he still prefers Delta and plans to trim his United position.

"I probably expect to be out of it pretty soon," Sethi said. "Delta is the one I'm going to keep for a longer term."

UAL, DAL Price Action: At publication time, United was up 6.89% at $50.16 and Delta was up 6.05% at $44.51.

Photo: juno1412 from Pixabay.