Delta Air Lines' Resilient Revenue Growth And Potential $10 EPS: Analysts Share Optimistic View

Susquehanna analyst Christopher N. Stathoulopoulos reiterated a Positive rating on the shares of Delta Air Lines, Inc. DAL, raising the price target to $54 from $45.

Delta Air Lines recently revised its FY23 outlook and reiterated its FY24 targets in its Investor Day 2023 presentation. The airline mentioned that the air travel revenue is returning to Long-Term Trend, with Industry Revenue to, from, and within the U.S. as % of GDP. The historical average was 1.3%; for FY22, it reached 1.2%, and for FY23, it is estimated to reach 1.3%.

The analyst notes that potential upside catalysts include the widespread distribution of the CV-19 vaccines and an easing of travel restrictions. 

Also Read: Delta Air Lines Resumes Dividend Payment After Three Year Suspension

In addition, solid booking trends into 1H23 on higher demand and a sustained decline in WTI crude and jet fuel prices are likely to aid growth.

The analyst raised the 2Q EPS estimate by $0.25 to $2.40 (vs. revised guidance of $2.25 to $2.50) on ASMs +17% Y/Y (consistent with guidance). 

For FY24, the analyst raised the EPS estimate by $0.95 to $7.

Morgan Stanley analyst Ravi Shanker reiterated an Overweight rating on Delta Airlines with a price target of $70. 

Shanker remains bullish on the management's claim that pent-up demand still has a long way to go. 

Management continues to see a constructive industry backdrop, with pent-up air travel still needing to be satisfied.

The analyst notes that this is on top of a resilient consumer (esp. the high-income consumer), strong employment, and an estimated >$300 billion of missing demand.

If 2023 EPS could come in comfortably above the 2024 target of $7, it puts DAL firmly on the path to achieving $10 EPS, the analyst adds.

With a line of sight to $7+ EPS in 2024, the stock has significant room for upside. 

Price Action: DAL shares are trading higher by 0.99% to $46.55 on the last check Wednesday.