United Airlines (UAL) Q4 "solid beat" and Q1 EPS guidance should be enough to keep the momentum going in 2025, Morgan Stanley said in a note Thursday.

The analysts said that the big debate now is how conservative the 2025 guidance is, which remains a positive challenge. A strong Q1 forecast, potential revenue growth from domestic and international routes and factors like jet fuel price changes suggest the airline could exceed the high end of its 2025 guidance.

Morgan Stanley also said the management's Q1 EPS guidance of $0.75 to $1.25 is nearly 80% higher than their estimate at the midpoint and 89% higher than consensus estimates. Management emphasized that this guidance is achievable and accounts for some uncertainties.

Over the past few years, management has focused on restoring profitability in Q1 through network adjustments, and this guidance suggests its efforts are paying off. For the full year 2025, management expects EPS to be between $11.50 and $13.50, which is "likely extremely conservative", especially considering the strong Q1 guidance, the analysts added.

The analysts also said that a key focus was on the timing of an Investor Day, where updates on four main topics are expected. These include long-term guidance, UnitedNEXT details, loyalty programs, and other initiatives like Starlink.

"While we did not get a date, we were encouraged that an Investor Day remains on management's radar and that we might get some ad hoc disclosure on loyalty over the course of the year," Morgan Stanley said.

The analysts said that after Q4 results, they updated their EPS estimates for 2025 to 2027 to $13.89, $15.21, and $16, respectively, compared to previous estimates of $12.92, $14.39, and $15.68.

Morgan Stanley raised its price target on United Airlines to $140 from $130 while keeping its overweight rating.

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