IB Net Payout Yields Model

Delta Air Lines: No Turkey Here

Update - Dec. 19 

The market is so off on airline stocks that Citi increased the PT on a stock already providing 67% upside. Most of the other legacy airlines are even cheaper. The market is so focused on recession fears, investors are missing the massive opportunity. 

Citi analyst Stephen Trent raised the firm's price target on Delta Air Lines to $59 from $55 and keeps a Buy rating on the shares. Delta's combination of international route exposure, seat mile cost dilution and relatively stable fuel prices should support the shares over the next year, Trent tells investors in a research note. The analyst continues to view Delta as his favorite U.S. carrier. As the recovery on several international corridors seems to be six- to nine months behind the U.S. domestic recovery, Delta's passenger volumes could benefit "from this momentum," writes Trent.

Read more at: 

Update - Dec. 15

The airline stocks remain absurdly cheap. One can argue Delta is a $90 stock at just 12x '24 EPS targets of $7.50. 

-Deutsche Bank reiterated its bullish view on Delta Air Lines (NYSE:DAL) after taking in the airline company's recent guidance update.

-Analyst Michael Linenberg called Buy-rated Delta the industry's leading free cash flow story at an attractive valuation. The view is that DAL is emerging as an earnings growth and deleveraging story as well.

-On valuation: "We think DAL shares are a bargain with the stock trading at 4.5x our 2023 EPS estimate of $5.35 and 3.9x our 2024 EPS estimate of $7.50. The valuation story is further bolstered by a free cash flow yield of 9% based on our 2023 free cash flow forecast (~$2 billion) and 18% based on our 2024 forecast (~$4 billion)."

Finviz Chart

Original article published on Nov. 29
  • After solid traffic demand during the Thanksgiving holiday, Delta Air Lines appears on pace to generate strong profits in Q4'22.
  • The airline continues to trade like the future is cloudy and not represented by ~$4.50 in per share profits over the last 3 quarters.
  • The stock is a gift here trading below 5x 2024 EPS targets.

After a strong Thanksgiving holiday, investors should have no doubt about the rebound in airlines and specifically Delta Air Lines (NYSE:DAL). The company has produced a remarkable rebound in profits, yet the stock is still valued as if a profitable rebound remains in doubt. My investment thesis remains ultra-Bullish on the airline stock with an expectation for a full profit rebound for a stock that was once considered cheap at $60 and now trades below $35.

Read the full article on Seeking Alpha. 

Disclosure: No position mentioned. Please review the disclaimer page for more details. 


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