Why Delta Stock Moved To Monthly Highs Today

Delta Air Lines Video 25.05.21.

Delta Stock Moves Higher As Demand For Leisure Travel Grows

Delta stock opened with a gap up today after the company stated that pent-up demand pushed forward bookings in the leisure segment beyond 2019 levels.

Business and international demand remain under pressure due to pandemic so airlines hope that strong domestic demand will boost their revenues during the summer season. Other airline stocks are also moving higher today as traders bet that summer months will bring strong results.

The successful mass vaccination program in the U.S. and strong stimulus provided by the government and the Fed, together with pent-up demand for “normal” life which includes vacations, served as main catalysts for strong demand in the leisure segment.

I’d note that some traders may be willing to speculate that the real rebound of the international travel may be coming soon as EU looks ready to present its vaccine passport in the upcoming weeks, although it remains to be seen whether the adoption of this passport will be fast enough to boost international sales during this summer season.

What’s Next For Delta Stock?

Delta stock has recently pulled back from yearly highs near the $52 level but the stock looks ready to gain more upside momentum ahead of the summer season.

Analysts expect that Delta will report a loss of $3.84 per share in 2021. The company is projected to return to profitability in 2022 with earnings of $4.00 per share. At current levels, Delta stock is trading at roughly 12 forward P/E which looks rather cheap compared to many peers.

I’d note that the market will likely focus on the pace of the recovery rather than on the company’s valuation in the upcoming months. If leisure travel is strong while demand for international and business travel shows real signs of life, the stock may move higher faster than analysts update their earnings estimates.

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