Credit Suisse And UBS Shower Delta Air Lines, Inc. (NYSE:DAL) With Appreciation

The stock of Delta Air Lines, Inc. (NYSE:DAL) took flight after Credit Suisse analysts tipped that investors should amass the carrier’s stock when it will report its earnings within few weeks. Analysts Julie Yates and Krishna Vege based their recommendation on projections that second-quarter PRASM guides for the carrier could touch low-single-digit. They expect Delta Air Lines, Inc. (NYSE:DAL)’s PRASM guides to come in the range of negative 2% to 0%.

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Buying opportunity & oil

Credit Suisse sees buying opportunity in Delta Air Lines, Inc. (NYSE:DAL), which could come short in first-quarter numbers amid forex pressure and Q2 guides for efficiency. Separately, Delta Air Lines, Inc. (NYSE:DAL) also gained strength due to further fall in oil prices, which is translating into lower fuel costs for the carrier. Brent touched $54.45, down by 2.61% in New York while West Texas Intermediate slipped 2.1% to $43.72. Robust gain in Dollar and OPEC’s decision to maintain production levels has disturbed the outlook for the oil.

Higher valuations

Lately, Delta Air Lines, Inc. (NYSE:DAL) is finding lot of love from research firms as earlier UBS analysts Darryl Genovesi and Raymond Wong also predicted good future for the carrier. The research firm said that the company has bigger upside than now. The firm noted that though airline stocks have rallied due to low fuel costs but they are still trading at just 8 times of 2016 EPS. UBS too feels that it is time to buy airline stocks at multiple expansion is probable once PRASM resumes growth.

Analysts highlighted that Delta ‘s unique fleet strategy and its non-union led workforce offers a flexible operating model, which can function with lower costs, better cash generation, and better ROIC as against the competitors. They said that Delta can trade in the row of $70. Meanwhile, the carrier has welcomed the remarks of the two research firms and gained 3.17% to settle at $47.26 during the previous trading session.

About the Author

Stinson is US Markets Daily’s Senior Producer for News & Public Affairs.

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