andresr/E+ via Getty Images
- Wheels Up Experience (NYSE:UP) shares fall as Morgan Stanley initiates coverage on the stock with an Underweight rating. The firm points to downside risk due to Wheels Up small total addressable market of only the top 1%+ of US households making at least $2.7M+/year according to the firm's analysis.
- Morgan Stanley sees increases in flight options, pricing reductions, high user retention, and incremental route expansion driving 18% CAGR user growth from '20 to '25.
- However, the fact that private flying accounts for just 16% of total airline spending and a flight is around 21 times more expensive than a business/first class flight means that Wheels Up growth is limited.
- Shares are down 5.68% pre-market.
- Morgan Stanley assigns a price target of $5.90 to the stock, representing 27% downside risk from the closing price Monday. The average price target for UP is $13.50.