Delta Air shares gain the most in 32 weeks on Tuesday, fourth-quarter earnings top estimates on client growth

Delta Air Lines Inc’s (DAL) fourth-quarter earnings, reported on Tuesday, exceeded Wall Street estimates on new customer growth and supported by client loyalty to the brand.

Rival air carriers that operate Boeing 737 MAX aircraft are together cancelling over 10 000 monthly flights as the jet’s global grounding continues. On the other hand, Delta Air does not have the MAX in its fleet and is able to bolster its flight capacity and attract new customers.

Delta Air shares closed higher for a fifth consecutive trading session in New York on Tuesday. It has also been the sharpest daily surge since June 4th. The stock went up 3.29% ($1.96) to $61.45, after touching an intraday high at $62.25, or a price level not seen since July 31st 2019 ($62.52).

Shares of Delta Air Lines Inc have risen 5.08% so far in 2020 compared with a 1.62% gain for the benchmark index, S&P 500 (SPX).

In 2019, Delta Air’s stock went up 17.19%, thus, it underperformed the S&P 500, which registered a 28.88% gain.

Total adjusted operating revenue, excluding refinery sales, went up 7.0% year-on-year to $11.4 billion during the quarter ended on December 31st.

Net income attributable to shareholders increased 8% year-on-year to $1.1 billion during the fourth quarter.

Meanwhile, earnings per share, which exclude special items, were reported at $1.70 during the latest quarter. The figure compares with a consensus of estimates pointing to adjusted earnings of $1.40 per share.

Delta Chief Executive Ed Bastian projects between 5% and 7% year-on-year growth in total revenue during the first quarter as demand for air travel continues to rise “at record levels.”

The company expects a 2% to 3% increase in non-fuel unit costs during the first quarter and zero to 2% growth in revenue per available seat mile.

The air carrier also said it had generated $4.2 million of free cash flow in 2019 and expected to do so again this year.

Analyst stock price forecast and recommendation

According to CNN Money, the 18 analysts, offering 12-month forecasts regarding Delta Air’s stock price, have a median target of $65.50, with a high estimate of $90.00 and a low estimate of $60.00. The median estimate represents a 6.59% upside compared to the closing price of $61.45 on January 14th.

The same media also reported that at least 10 out of 20 surveyed investment analysts had rated Delta Air’s stock as “Buy”, while 8 – as “Hold”.

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