Delta Air Lines' reports second-quarter financials Thursday after raising its 2023 outlook and Q2 revenue expectations on the back of increased demand for travel this summer. DAL shares dropped Wednesday.
Like many air carriers, DAL had a run of losses during the Covid pandemic. However, airlines are now benefiting from a post-pandemic rebound in travel.
As a result, airline stocks are taking off. Collectively, the 19 stocks in IBD's Transportion-Airline industry group have rallied around 49% in 2023. That's the eighth-best year-to-date increase among the 197 industries tracked by IBD.
On Tuesday, Jefferies raised its Delta Air Lines stock price target to 60, up from 50. The firm maintained a buy rating on the shares with expectations Q2 results will point to the continued demand strength with firm pricing given continued capacity constraints. Delta remains the Jefferies top-pick in the airline stocks group long-term sustainability of free cash flow through diversified streams.
On June 27, the air carrier raised its annual outlook, guiding expectations for 2023 profits to the top end of its prior forecast range, from $5-$6 per share. The carrier earned $3.20 a share in 2022.
Delta also boosted its annual revenue outlook to 17%-20% growth, compared with the prior forecast of a 15%-20% jump.
The midpoint of Delta's 2023 revenue view is $54 billion. Delta's presentation listed a "long-term goal" of generating more than $60 billion in total revenue. Analyst consensus is for Delta to see 2023 sales total $54.07 billion.
Meanwhile, the Atlanta-based carrier sees free cash flow at $3 billion for the year, up from its previous outlook of $2 billion. Delta also predicts operating margins of 10%-12%, the top end of its previous forecast.
The air carrier also raised its second-quarter revenue growth target to 17%-18% from 15%-17%.
Delta Air Lines Stock: Earnings
Estimates: Analysts expect Delta earnings to grow 67% to $2.40 per share in the second quarter. Sales are predicted to increase 17% to $14.44 billion, according to FactSet.
Results: Check early Thursday for Q2 results.
Delta Air Lines stock fell 1.3% to 48.01 Wednesday during market trade. On Tuesday, shares advanced 0.5% to 48.70, working on a ninth straight weekly advance. DAL is up around 47% so far in 2023, with a 57% gain off a March 24 low.
Delta shares bolted 6.8% following its June 27 outlook updates. Shares topped a 40.30 entry for a cup base on June 13 after a major run-up in late May.
The guidance increase follows Delta missing Wall Street expectations for Q1 on April 13. However, the company still saw profits surge compared to last year. The air carrier reported earnings of 25 cents per share, up from a loss of $1.23 per share a year ago.
Meanwhile, revenue jumped 27% to $11.84 billion in the first quarter. The company also reported "record advance bookings for the summer," which is peak travel season.
The airlines stock reported fourth-quarter earnings on Jan. 13, after raising its Q4 guidance and giving a bullish 2023 outlook in mid-December, also on the back of robust travel demand.
Delta Air Lines stock ranks fourth in the Transportation-Airline industry group. DAL has a perfect Composite Rating of 99. DAL shares have a 94 Relative Strength Rating and a 82 EPS Rating.
Airline stocks United Airlines fell 1.4% Wednesday while American Airlines dropped 1.2%. Alaska Air Group slipped 0.6%.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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