Key insights
- Bernstein raised its price target for Delta Air Lines, citing strong demand and expectations for the company to beat Q2 estimates. The firm highlighted steady consumer demand and improved operational factors. While near-term capacity growth may be moderated due to market conditions and staffing, the overall outlook remains positive, suggesting continued strength in the travel sector which could have a modest positive spillover effect on related equities.
Investing.com - Bernstein SocGen Group raised its price target on Delta Air Lines (NYSE:DAL) to $93 from $88 Wednesday while maintaining an Outperform rating on the shares. The stock has surged 78% over the past year and currently trades at a P/E ratio of 12.2, according to InvestingPro data.
The firm expects Delta to beat second-quarter estimates by 2% or more, with unit revenue projected to rise 12.2% year-over-year in the June quarter. Demand has remained steady with no signs of consumer-driven weakness appearing in the numbers.
The airline’s completion factor is trending better, which should help on costs. Bernstein expects cost per available seat mile excluding fuel to increase 6.5% year-over-year, in line with prior guidance. Non-operating expense in the second quarter is estimated at $200 million.
Fuel costs are expected to come in at $3.90 to $4.00 per gallon, slightly better than earlier in the quarter. Delta purchases fuel a couple of weeks ahead, so recent moderation in oil prices will not appear until the third quarter.
Bernstein raised its third-quarter estimate by 5%, in line with consensus but at a lower level of available seat miles. The firm expects third-quarter capacity growth of 1.7% should be closer to flat based on schedule data, as Delta reduces its near-term schedule amid modest declines in market volumes and cost pressures from pilot staffing.InvestingPro analysis suggests the stock is slightly overvalued at current levels. Subscribers gain access to comprehensive Pro Research Reports and exclusive tips for smarter investment decisions.
In other recent news, Delta Air Lines announced plans to install finlet modification packages on 240 of its Boeing 737-800 and 737-900ER aircraft. This decision follows a technical collaboration with Vortex Control Technologies and an evaluation of flight test data and aerodynamic performance. Additionally, airline stocks, including Delta Air Lines, experienced gains as oil prices declined due to a peace agreement between the United States and Iran.
Delta Air Lines saw its shares rise by 4.2% as part of this trend. Furthermore, Jefferies reported a significant increase in airfares, noting a 26.7% year-over-year rise in May, which marks an acceleration from previous months. This increase comes as airfares face easier year-over-year comparisons due to past geopolitical concerns. These developments highlight the current dynamics in the airline industry, including technical advancements and economic factors influencing stock performance and pricing.
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