Delta Air Lines (DAL) could be an intriguing choice for investors, according to analysts’ ratings. Wall Street expects a massive upside in the company’s share price. About 81% of analysts have provided bullish recommendations on the airline.
As of February 12, out of 21 analysts, 17 have given DAL “strong buy” or “buy” recommendations, while the remaining four have given it “hold” recommendations. Given Wall Street’s one-year forward price target of $63.21, the stock has an upside of 24.9% from its current market price of $50.61.
Delta Air Lines’ strong fourth-quarter earnings results have been the driver of this bullish sentiment. The company reported its fourth-quarter results on January 15. Its top and bottom lines both surpassed analysts’ estimates and marked significant year-over-year improvement.
The airline’s earnings mainly benefited from strong revenue growth and efficient cost management. A reduced number of shares outstanding also aided its bottom line results. Higher revenue from premium products and non-ticket sources and an increase in unit revenue also drove the company’s fourth-quarter total revenue.
Going forward, analysts believe Delta Air Lines will continue benefiting from a healthy travel demand environment. Its cost-control measures, fleet transformation, and One Delta initiatives are expected to further drive its bottom line results. Analysts also expect lower fuel prices and the company’s strategy of adding more business class seats to expand its margins in the coming quarters.
Peers’ ratings and target prices
Analysts seem bullish on the entire airline industry (XLI) right now. They’ve provided “buy” recommendations for most of Delta Air Lines’ peers. The one-year target prices for American Airlines (AAL), Spirit Airlines (SAVE), United Airlines (UAL), and Southwest Airlines (LUV) signify potential upsides of 24.5%, 21.9%, 17.3%, and 9.7%, respectively, from their current prices.
In this series, we’ll discuss Delta Air Lines’ fundamental growth drivers, which could push its share price higher.