Why Delta Air Lines Stock Is Under Pressure Today

Delta Air Lines Stock Falls As EU Is Reportedly Ready To Introduce Travel Restrictions On U.S. Travellers

Shares of Delta Air Lines found themselves under pressure after recent reports indicated that EU may reintroduce coronavirus-related travel restrictions on travellers from U.S.

According to the reports, the reason for this decision is the active spread of the Delta variant of coronavirus in the U.S. As a result, the average U.S. infection rate exceeded the average EU infection rate.

The move would be a major blow to hopes for global travel normalization. The spread of the Delta variant has already put some pressure on the industry. Airline stocks have been moving lower since early June, and the new developments may serve as an additional bearish catalyst.

What’s Next For Delta Air Lines Stock?

Earnings estimates for Delta Air Lines have moved a bit lower in recent weeks but remained close to levels seen at the beginning of August. Analysts expect that the company will report a loss of $3.48 per share this year and a profit of $4.32 per share in the next year, so the stock is trading at less than 10 forward P/E which is certainly cheap in the current market environment.

However, traders will likely focus on the spread of the Delta variant in the upcoming weeks. It is already clear that the the surge of the Delta variant may have an impact on demand and other countries’ travel-related decisions.

In this light, it remains to be seen whether Delta Air Lines stock will be able to gain upside momentum in the near term. The company’s valuation remains attractive, but coronavirus-related worries may put more pressure on the stock. The recovery of business travel and international travel is likely postponed due to the surge of the Delta variant, and the stock needs stabilization on the virus front for sustainable upside.

For a look at all of today’s economic events, check out our economic calendar.