Why Delta Air Lines Stock Keeps Moving Higher

Delta Air Lines Stock Rallies As U.S. Opens Up For International Travel

Shares of Delta Air Lines gained strong upside momentum as U.S. lifted pandemic travel restrictions which means that international visitors could visit the country. While U.S. has imposed certain rules, including a vaccination requirement, the move is expected to lead to a significant boost to airlines’ revenue due to pent-up demand.

Recent news from Merck and Pfizer, who presented positive results of their coronavirus treatments, also boosted sentiment in the travel and leisure segment.

It should be noted that while Delta Air Lines stock managed to move from the $40 to the $45 level in several trading sessions, it continues to trade well below yearly highs near the $52 level that were reached back in March.

What’s Next For Delta Air Lines Stock?

Currently, analysts expect that Delta Air Lines will report a loss of $4.57 per share in 2021. The company is expected to return to profitability in 2022 and report earnings of $3.47 per share, so the stock is trading at 13 forward P/E.

It should be noted that earnings estimates have been moving lower in recent weeks as challenges like labor shortage, global supply chain disruptions and high oil prices hurt outlook for airlines’ profitability.

U.S. decision to open the country for international travellers will likely lead to a material increase in demand for Delta Air Lines services. It remains to be seen whether problems like labor shortage will hurt profitability and performance, but it looks that traders are ready to think about longer-term potential and ignore temporary challenges.

S&P 500 is trading at all-time high levels, and traders search for stocks which have not reached sky-high valuation levels and have the opportunity to grow. In this environment, Delta Air Lines stock and other stocks of the segment have a chance to attract more traders’ interest and develop additional upside momentum.

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