Despite the strong beginning of the week on Monday, US stocks were lower in premarket Tuesday trading. Even though airline stocks gave investors hopes for economic recovery after resuming flights, Delta Air Lines declined more than 6% in premarket trading.
These results came after the massive gains on Monday, prompted by the reopening of businesses around the world. Despite that, some investors felt that they are moving too fast as the economy has barely started to reopen.
Even though the number of passengers in the US is increasing as countries began to ease travel restrictions, Delta Air Lines decided to suspend about 11 of its domestic services to smaller cities in the US.
The Department of Transportation (DOT) allowed airlines to cut about 5% (or five cities) of their scheduled domestic flights. The 5% allowance will be valid until September 30, which is the expiration date of DOT’s CARES stimulus package.
Delta Air Lines will suspend its flights to 11 cities that include:
- Aspen, Colorado
- Bangor, Maine
- Erie, Pennsylvania
- Flint, Michigan
- Fort Smith, Arkansas
- Lincoln, Nebraska
- New Bern, North Carolina
- Peoria, Illinois
- Santa Barbara, California
- Scranton/Wilkes-Barre, Pennsylvania
- Williston, North Dakota
The airline shared that the services to these cities will be re-evaluated after September 30. Once the CARES package expires, the company will also be able to decide on whether it will resume the rest of the flights that were suspended in 10 metropolitan cities.
In addition to suspending some of its US flights, Delta Air Lines has also halted its services to Ottawa for an indefinite period. Meanwhile, flights to Saskatoon in Canada were also temporarily waived.
Analyst stock price forecast and recommendation
According to CNN Money, based on 12-month price forecasts for Delta Air Lines Inc., 16 analysts have a median target of $35.50, with a high estimate of $47.00 and a low estimate of $21.00. The median estimate represents a +3.44% increase from the last price of $34.32.
The same media also offers the recommendations of 19 investment analysts who have a consensus rating of “Buy” for the Delta Air Lines Inc. stock. Out of the 19 analysts, 9 ranked the stock as “Buy”, 7 as “Hold” and 3 – as “Outperform”.