Airline Stocks On Rebound? Analyst Says Take A Look At Alaska Air, Delta, Jet Blue, Southwest

The leisure "travel rebound is in full swing" in 2021, BofA Securities wrote in an industry-wide note, adding that U.S. airline stocks are trading 7% above pre-pandemic levels compared to 10% below for the rest of the travel industry.

The Airline Analyst: Andrew Didora made changes to the firm's top airline picks:

Alaska Air Group, Inc. ALK maintains at Buy, price target lifted from $72 to $78.
Delta Air Lines, Inc. DAL maintains at Neutral, price target lifted from $46 to $49.
JetBlue Airways Corporation JBLU maintains at Buy, price target lifted from $19.50 to $22.
Southwest Airlines Co LUV maintains at Buy, price target lifted from $60 to $68.

Bookings Momentum: The leisure airline industry is taking advantage of "robust bookings momentum" and investors should have exposure to this segment of travel, Didora wrote in the note. BofA's checks point to leisure booking levels just 2.1% off from 2019 levels, although corporate travel is still down 77.2% and total bookings are down 44% from 2019.

Despite the improving environment, U.S. airline stocks have for the most part moved notably higher. In fact, when trade started re-opening with the news of a vaccine, U.S. airline stocks went up 76% versus the S&P 500 index that is up 13%. Since the start of 2021, U.S. airline stocks are up nearly three times as much compared to hotels and cruise lines.

Related Link: BofA Lifts Boeing Price Target, But Cautions 'Risks Remain'

The Four Stocks: Investors should focus on airlines with superior balance sheets. In Alaska Air's case, the company's net debt has not changed throughout the pandemic. Delta, despite a Neutral rating, offers investors no equity dilution while management is focused on cutting costs by eliminating fleet types. JetBlue offers a mostly leisure-oriented network from the northeast to Florida and the Caribbean, and Southwest has net cash on its balance sheet.

ALK, DAL, JBLU, LUV Price Action:
ALK: Shares of Alaska Air Group were trading lower by 2.59% Monday morning at $66.55.
DAL: Shares of Delta Air Lines were trading lower by 1.68% Monday morning at $46.86.
JBLU: Shares of JetBlue Airways were trading lower by 2.15% Monday morning at $19.27.
LUV: Shares of Southwest Airlines Co were trading lower by 1.08% Monday morning at $60.63.

(Photo: Delta Air Lines)