Delta Air Lines could be a $57 stock: Citi analyst

on Jul 18, 2022
  • Citi analyst says Delta Air Lines stock is a "buy" with upside to $57 a share.
  • DCLA's Sarat Sethi agrees with the bullish view on CNBC's "Halftime Report".
  • Shares of Delta Air Lines are down nearly 30% versus the start of the year.

Shares of Delta Air Lines Inc (NYSE: DAL) are up roughly 6.0% on Monday after a Citi analyst opened a 90-day “positive catalyst watch” on the legacy U.S. air carrier.

Delta Air Lines stock has an 80% upside from here

Stephen Trent reiterated his “buy” rating on Delta Air Lines stock this morning. The analyst has a price target of $57 a share on it that translates to about an 80% upside from here.

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Last week, the Atlanta-headquartered airline saw its per-share earnings for fiscal Q2 come in we below the Street estimates. Still, Trent said in his note to clients:

Delta generated $1.60 billion in free cash flow this quarter. Still, the stock is in line with mid-2020 levels when daily cash burn was in the millions and there were no COVID-19 vaccines in sight.

He expects better margins and a positive surprise this quarter, now that much of the bad news is already priced in.

DCLA’s Sarat Sethi agrees with the positive outlook

Agreeing to the bullish call on CNBC’s “Halftime Report”, Sarat Sethi – Managing Partner at DCLA also said the stock down nearly 30% from its year-to-date high was an “opportunity”.

The demand is there; they can’t fill up enough of their planes. I think going forward they’ll be very careful to not [just] focus on capacity. So, the stock is beaten down and I think this is a good opportunity to buy this.

Also on Monday, Delta Air Lines said it’s buying one hundred “737 Max” from Boeing. Deliveries will begin in 2025. The stock currently trades at a trailing 12-month price-to-earnings ratio of 34.

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