| | | | Delta Gets an Upgrade on Business Travel Comeback. The Stock Is Rising Again. -- Barrons.com |
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| Dow Jones Newswires October 14, 2022 07:52:00 AM ET
Delta Air Lines stock looked set to move higher for a second day Friday after being upgraded by Cowen analysts.
The airline, the first major carrier to report this earnings season, missed third quarter estimates Thursday but provided upbeat guidance for the final three months of the year on improving corporate travel demand.
Cowen analysts, led by Helane Becker, upgraded the stock to Outperform from Market Perform Friday. Becker said the fourth quarter looks strong for Delta with business and international traffic returning, creating a more attractive revenue mix. The team has a price target of $54, implying a 78% upside to Thursday's closing price.
"The mix of air traffic passengers is shifting with higher yielding business and international passengers making up a great share," Becker said. "The former is directly correlated with the return to office, while the latter receives a boost from loosening of pandemic restrictions," she added. They also noted that the earnings miss was "mostly due to Hurricane Ian," which had a $35 million impact.
Delta (ticker: DAL) said business bookings improved post Labor Day, rising to 80% of 2019 levels by the end of the quarter. It expects revenue in the December quarter to be 5% to 9% higher than the same period in 2019, and adjusted earnings per share of $1 to $1.25. Before that guidance, analysts were forecasting EPS of $0.79 and revenue around 3% than 2019 levels.
JPMorgan analysts are even more bullish on the stock, with an Overweight rating and a $74 price target. The bank upgraded its fourth quarter EPS forecast for Delta to $1.15 from $0.61. "We continue to view Delta as the industry leader among full-service airlines," they said in a note Thursday. "We believe DAL has the ability to emerge from the Covid-19 crisis with higher margins."
Delta stock, which climbed 4% Thursday, was 3.4% higher at $31.40 ahead of the open Friday.
Write to Callum Keown at callum.keown@dowjones.com
(END) Dow Jones Newswires October 14, 202207:52 ET (11:52 GMT) Copyright (c) 2022 Dow Jones & Company, Inc. |
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