The Biggest Loser: United Continental Sinks 11.4%


Source: Blogs Barrons Stocks To Watch

United Continental (UAL) plunged to the bottom of the S&P 500 Wednesday, as worries about capacity overshadowed its beat-and-raise quarter

United tumbled $8.92, or 11.4%, to $69.05. The S&P 500 slipped 1.59 points, or 0.06%, to 2837.54.

United said that it earned $1.40 a share, on revenue that rose 4.3% year over year to $9.44 billion. Analysts were looking for earnings of $1.31 a share on $9.41 billion in revenue.  For the full year, it said it expects to earn between $6.50 and $8.50 a share, above the $7 analyst estimate. However, investors were spooked by its capacity increases, which it forecast between 4% and 6%.

United had been on a roll, reporting strong December traffic, but investors sent other airline stocks down on the news as well, with  Delta Air Lines‘ (DAL) and American Airlines (AAL) ending down more than 5% and 6%, respectively, on worries that a lack of capacity discipline could spread throughout the industry. 

Bernstein’s David Vernon reiterated a Market Perform on United, but wrote that the capacity news ” is a bigger risk to sentiment than it will end up being to fundamentals.”

United is still up 2.5% year to date, although it’s fallen 5.1% in the past 12 months.

Source: Blogs Barrons Stocks To Watch