United Air shares close higher on Wednesday, air carrier expects $90 million charge in Q4 related to Hong Kong routes

United Airlines Holdings Inc (UAL) said earlier this week that it could incur a non-cash impairment charge of $90 million during the fourth quarter associated with its routes to Hong Kong, as a result of local anti-government protests.

United Air shares closed higher for the fourth time in the past ten trading sessions on NASDAQ on Wednesday. The stock went up 0.61% ($0.53) to $87.30, after touching an intraday high at $88.45, or a price level not seen since January 2nd ($90.57).

Shares of United Airlines Holdings Inc have retreated 0.90% so far in 2020 compared with a 0.69% gain for the benchmark index, S&P 500 (SPX).

In 2019, United Air’s stock went up 5.21%, thus, it again underperformed the S&P 500, which registered a 28.88% gain.

“The company conducted its annual impairment review of intangible assets in the fourth quarter of 2019, which consisted of a comparison of the book value of specific assets to the fair value of those assets calculated using the discounted cash flow method. Due to a decrease in demand for the Hong Kong market and the resulting decrease in unit revenue, the company determined that the value of its Hong Kong routes had been fully impaired. Notwithstanding such impairments, the collateral pledged under the company’s term loan continues to be sufficient to satisfy the loan covenants,” United Airlines said in a statement.

In June, protests in the city escalated in relation with a now-withdrawn extradition bill. However, a broader movement has been formed since then.

Analyst stock price forecast and recommendation

According to CNN Money, the 17 analysts, offering 12-month forecasts regarding United Air’s stock price, have a median target of $110.00, with a high estimate of $140.00 and a low estimate of $95.00. The median estimate represents a 26.00% upside compared to the closing price of $87.30 on January 8th.

The same media also reported that at least 14 out of 21 surveyed investment analysts had rated United Air’s stock as “Buy”, while 6 – as “Hold”.