On Thursday, Delta Air Lines Inc. (NYSE: NYSE:DAL) saw its price target increased by Argus to $55.00, up from the previous $39.00, while the firm retained a Buy rating on the stock. The adjustment reflects a positive outlook on the leisure travel sector for the year 2024, alongside an anticipated continued recovery in international traffic. This optimistic scenario is partly attributed to the lifting of most travel restrictions in Western Europe.
The report from Argus underscores the expectation that the demand for leisure travel will remain robust throughout 2024. The firm anticipates that Delta Air Lines will benefit from this trend, which is likely to contribute to the company's financial performance. The airline industry has been closely monitoring the resurgence of leisure travel as a key indicator of recovery following the challenges posed by global events in recent years.
In addition to leisure travel, Argus projects a further rebound in international traffic for Delta Air Lines. The easing of travel restrictions, particularly in Western Europe, is expected to facilitate this recovery. Airlines have been adapting to the changing landscape of travel regulations, and the removal of barriers is seen as a positive driver for international flight bookings.
Argus has based its valuation of Delta Air Lines shares on what it considers an overly cautious outlook, resulting in an attractive valuation at 6.6 times the revised 2024 earnings per share (EPS) estimate. The new price target of $55 indicates a potential total return of 17% from the stock's current levels, signaling confidence in the airline's ability to achieve growth targets.
The firm's commentary highlights the key factors influencing the revised price target: "We expect demand for leisure travel to remain strong in 2024. We also expect a continued recovery in international traffic, helped by the elimination of most travel restrictions in Western Europe.
Delta Air Lines and its stakeholders may view this updated analysis as a sign of the airline's resilience and potential in the current market.
InvestingPro Insights
In light of Argus's recent price target increase for Delta Air Lines Inc. (NYSE: DAL), real-time data from InvestingPro provides further context to the airline's financial landscape. Currently, Delta boasts a market capitalization of $29.55 billion and trades at an attractive P/E ratio of 6.08, with a slight adjustment to 6.85 when considering the last twelve months as of Q4 2023. This supports Argus's view of the stock being attractively valued.
InvestingPro Tips highlight Delta's high shareholder yield and its status as a prominent player in the Passenger Airlines industry. While six analysts have revised their earnings downwards for the upcoming period, the airline is still predicted to be profitable this year and has been profitable over the last twelve months. Moreover, Delta has seen a significant price uptick of nearly 31% over the last six months, aligning with the positive sentiment expressed by Argus.
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