Delta Air Lines (DAL) reports fourth-quarter and full-year earnings and revenue Friday with the air carrier targeting 95% EPS growth in 2023. Meanwhile, DAL stock edged higher Thursday, just below a buy point.
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Morgan Stanley recently reinstated Delta as a “top pick” airlines stock in 2024, as the industry bellwether prepares to set the tone for airline earnings when it reports Friday.
The surge in positive airline analyst activity contrasted with events surrounding the Alaska Airlines (ALK) flight 1282 incident and the ensuing inspections of Boeing (BA) 737 Max 9 model aircraft.
For Delta, analysts expect EPS to fall 21% to $1.17 in Q4 with revenue increasing 10% to $13.55 billion. For the full-year, Wall Street forecasts earnings surging 90% to $6.13 per share and sales growing 20% to $54.58 billion. Meanwhile, Delta Air Lines expects 2023 earnings of $6.00-$6.25 per share with Q4 EPS between $1.05-$1.30.
Ahead of earnings, Morgan Stanley analyst Ravi Shanker on Monday said Delta held specific industry advantages.
“We expect the market to gravitate toward DAL’s compounding and unique growth story as the airlines gain more traction in 2024,” Shanker wrote.
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DAL Stock Performance
Delta Air Lines stock advanced 0.4% to 42.27 Thursday during market action. In January, DAL stock has gained 5%, trading just below a 42.70 buy point in a cup-with-handle base.
In the third quarter, Delta noted steady domestic demand with passenger revenue increasing 6% compared to 2022 on 11% more capacity, as the domestic unit’s revenue was down 4% year-over-year. International revenue spiked 35% with record margins across all regions.
“Robust demand for travel on Delta is continuing into the December quarter,” Delta President Glen Hauenstein said in Oct. 2023.
Morgan Stanley’s Shanker on Monday also upgraded American Airlines (AAL) to overweight from equal weight and maintained a 20 price target on AAL shares. The analyst also has Alaska Airlines as its number two pick in the airlines space.
Shanker sees upside to ALK management in 2024 and said that the air carrier will look to “achieve industry-leading margins and drive long-term growth with bright spots from strong price in the premium product mix and strength of the loyalty program.”
ALK lost 0.2% Thursday. United Airlines (UAL), fresh off discovering loose fasteners during 737 Max 9 inspections mandated by the Federal Aviation Administration, gained 0.6% Thursday. AAL shares advanced 1.7% to 14.59.
In 2023, DAL stock gained 22%. Delta ranks second in the IBD Transportation-Airline industry group. The stock has an 85 Composite Rating out of a best-possible 99. DAL stock has a 73 Relative Strength Rating and a 77 EPS Rating.
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