Delta Airlines on Road to Recovery; Target Price $58
Delta Airlines, one of the major players in the United States aviation industry, reported a profit for the first time since late 2019 in the second quarter as federal relief helped cover losses.
The Airline company which provides scheduled air transportation for passengers and cargo reported posted a profit of $652 million. The airless company said a quarterly adjusted loss came in at $1.07 per share, better than the Wall Street consensus estimate of $1.36 per share loss.
The Atlanta-based airline said its revenue for the three months ended June 30 fell to $7.13 billion, down from the $12.54 billion seen in the same period a year ago. However, that was higher than the market consensus estimates of $6.22 billion.
At the time of writing, Delta Airlines shares traded 2.51% higher at $41.69 on Thursday.
“Delta Airlines’ (DAL) 2Q print, 3Q guide and more importantly, mgmt. commentary on key themes like corporate, international and costs show that the recovery remains on track (and may be running closer to the bull case). This establishes a good baseline for the rest of Airlines earnings season,” noted Ravi Shanker, equity analyst at Morgan Stanley.
“3Q guidance compares well to MSe and cons. 3Q capacity is expected to be down 28-30% (vs. MSe 29%), revenues down 30-35% (vs. MS/cons down 36/34%) vs. 2019. Mgmt guided to positive MSD pre tax margins for the September quarter despite what management characterized as good guy cost inflation items related to ramping up capacity which runs counter to normal seasonality (3Q CASMxF +11-14% vs. MSe +8.4%). However, mgmt. reiterated the target of CASMxF below 2019 levels by December and said 4Q would be positive pretax as well. CEO Bastian said that they are not seeing any impact of the new COVID variant on booking trends so far.”
Delta Airlines Stock Price Forecast
Twelve analysts who offered stock ratings for Delta Airlines in the last three months forecast the average price in 12 months of $58.00 with a high forecast of $73.00 and a low forecast of $45.00.
The average price target represents a 38.13% change from the last price of $41.99. From those 12 analysts, ten rated “Buy”, two rated “Hold” while none rated “Sell”, according to Tipranks.
Morgan Stanley gave the stock price forecast of $73 with a high of $96 under a bull scenario and $35 under the worst-case scenario. The firm gave an “Overweight” rating on the airlines’ stock.
Several other analysts have also updated their stock outlook. Bernstein raised the target price to $65 from $64. The Goldman Sachs Group increased their price target to $47 from $35 and gave the stock a neutral rating. Deutsche Bank raised shares to a buy rating from a hold rating and set a $55 price objective.
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