Delta Up on Positive Analyst Notes
Thursday May 17, 12:54 pm ET Delta Air Lines Jumps on Positive Notes From Analysts, Citing Competitive Advantages
NEW YORK (AP) -- Shares of Delta Air Lines Inc., which recently emerged from bankruptcy, rose Thursday after two analysts said the company could become one of the most profitable in the airline industry following its restructuring.
Shares rose $1.23, or 6.7 percent, to $19.57 in afternoon trading.
Lehman Brothers analyst Garrett Chase, in a client note, began coverage with an "Overweight" rating and $26.50 target price. He said he expects Delta's earnings growth to outpace rivals for 2007 and 2008.
"Having emerged from bankruptcy, Delta finds itself on solid fundamental footing with continued momentum behind it," wrote Chase. "Cost advantage combined with new network discipline should sustain modest outperformance in earnings."
Bankruptcy forced Delta to cut costs and capacity, which has resulted in a competitive advantage, the analyst said.
Delta can benefit from continued international momentum, added Chase, who thinks shares are attractively priced.
Morgan Stanley analyst William J. Greene also rated Delta at "Overweight" with a $26 target price.
"With a focus on the premium and international business travel markets, Delta has a significant unit revenue growth opportunity should it reach parity with the industry," wrote Greene. "Combined with relatively low costs, Delta could be one of the more profitable U.S. airlines."
However, the analyst noted that the stock could become volatile if institutional investors make moves.
Uncertainty in the airline industry -- which is facing demand concerns, excess capacity growth, and high fuel prices -- could also push around Delta shares, Greene said.
Thursday May 17, 12:54 pm ET Delta Air Lines Jumps on Positive Notes From Analysts, Citing Competitive Advantages
NEW YORK (AP) -- Shares of Delta Air Lines Inc., which recently emerged from bankruptcy, rose Thursday after two analysts said the company could become one of the most profitable in the airline industry following its restructuring.
Shares rose $1.23, or 6.7 percent, to $19.57 in afternoon trading.
Lehman Brothers analyst Garrett Chase, in a client note, began coverage with an "Overweight" rating and $26.50 target price. He said he expects Delta's earnings growth to outpace rivals for 2007 and 2008.
"Having emerged from bankruptcy, Delta finds itself on solid fundamental footing with continued momentum behind it," wrote Chase. "Cost advantage combined with new network discipline should sustain modest outperformance in earnings."
Bankruptcy forced Delta to cut costs and capacity, which has resulted in a competitive advantage, the analyst said.
Delta can benefit from continued international momentum, added Chase, who thinks shares are attractively priced.
Morgan Stanley analyst William J. Greene also rated Delta at "Overweight" with a $26 target price.
"With a focus on the premium and international business travel markets, Delta has a significant unit revenue growth opportunity should it reach parity with the industry," wrote Greene. "Combined with relatively low costs, Delta could be one of the more profitable U.S. airlines."
However, the analyst noted that the stock could become volatile if institutional investors make moves.
Uncertainty in the airline industry -- which is facing demand concerns, excess capacity growth, and high fuel prices -- could also push around Delta shares, Greene said.
