Delta Airlines (NYSE:DAL), one of the leading airlines in the US, notched an extra 1.1% in premarket trading following a two-step upgrade at Wolfe Research. The upward momentum continued into this morning's session as well. Wolfe's upgrade came on the strength of several factors, and its shift comes at a time when analysts are increasingly encouraging investors to buy in.
A Closer Look at the Wolfe Double Upgrade
Wolfe Research, via analyst Hunter Keay, upgraded Delta from “underperform” to “outperform.” This was part of a larger sweep of the airline sector, as Wolfe Research also issued upgrades to Alaska Airlines (NYSE:ALK) and United Airlines (NASDAQ:UAL).
Keay specifically cited the fact that Delta survived the pandemic, and without having to engage in a lot of cash-raising activities, as reason for the upgrade. The multiple government bailouts likely helped on that front; Delta received $5.4 billion in April 2020 and back in January 2021, expected to receive $2.9 billion in total aid, with $830 million of that in an unsecured loan. Much of that was in payroll assistance, however, geared toward preventing layoffs.
Additionally, Keay pointed to a likely resurgence in business travel starting with this quarter, amid pent-up demand, a concept which has been applied to everything from restaurants to retail. However, Keay doesn't expect business travel demand to improve to levels seen before the Covid-19 outbreak. This is to be expected, especially as more companies embrace telecommuting and remote work to one degree or another. Keay further asserted, in his research note, that the trading in airline stocks of late has been “bizarre”, and that the companies involved still have upside.
Additionally, two weeks ago, Delta announced a revision to its June-quarter revenues at the Bernstein Strategic Decisions Conference. There, Delta projected adjusted second-quarter revenue of between $6 billion and $6.2 billion. That's between 50% and 52% down from the second-quarter figures from 2019, but given that April guidance looked for a decline between 50% and 55%, it's still an improvement.
What Are Financial Analysts Saying About Delta Airlines Stock?
Meanwhile, Wolfe Research's increasing amenity to Delta is being felt throughout much of the financial analyst field, as noted by our latest research. Delta carries a consensus rating of “buy”, which it's held since March 2021, when it switched over from a “hold” rating, suggesting a positive overall outlook on the Delta Airlines stock forecast.
A year ago, Delta had six “buy” ratings, as well as 11 “hold” and one “sell.” Six months ago, that shifted to nine “buy” ratings, along with 10 “hold” and one “sell.” Today, we stand at 12 “buy” ratings, six “hold” and no “sell” ratings. The last holdout in the “sell” side was Wolfe Research itself, who departed that with its double upgrade earlier today.
Delta share price targets have a fairly broad range to them; the current consensus price target is $49.94, with a low of $30 and a high of $73. With Delta stock today trading at $44.64 as of this writing, there is some upside potential left to this stock.
Recent activity for Delta has been commonly positive. June, so far, has featured not only the Wolfe Research double upgrade, but a week prior, featured MKM Partners initiated coverage on the company as a “buy” with a $59 price target. Morgan Stanley also boosted Delta's price target from $70 to $73, the new high; the previous high of $79 was held by Wolfe Research, who despite a double upgrade also cut the price target from $79 to $55. That same day, Jefferies Financial Group upgraded Delta from “hold” to “buy”, and boosted the price target from $50 to $60 per share.
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