Wall Street is sticking with Delta (DAL) stock, despite a lot of reasons to fly away from it.
BofA analyst Andrew Didora slashed his EPS estimates for the airline sector on Wednesday, citing jet fuel prices nearly doubling in March due to the Iran war.
“We see two scenarios emerging from the current situation: 1) fuel stays higher for longer which results in airlines with negative or low margins either shrinking meaningfully or considering alternatives or 2) a quicker than expected end to the conflict drives a robust earnings recovery. We assume the industry benefitting from the second scenario and airlines with good margins and strong balance sheets emerging stronger from the first scenario,” Didora said.
The analyst reiterated his Buy rating on Delta, “given DAL’s premium and corporate exposure, and free cash flow generation.”
Deutsche Bank analyst Michael Linenberg put Delta on his “fresh money” stock buy list today in a note.
“We think Delta is best positioned to navigate through a higher fuel price environment given its diversified revenue streams (e.g., refinery, loyalty program, cargo, corporate, premium leisure, long-haul international, etc.) and investment-grade rated balance sheet,” Linenberg said.
