Delta Air Lines (NYSE: DAL) has confirmed that it will release its quarterly earnings on Thursday, January 13, 2022, before the market opens.
What to look for
The December quarter results are unlikely to be affected immensely by the spate of flight cancellation because of the omicron-triggered staffing issues and bad weather. However, the entire crisis aggravated on Christmas Eve, which implies that only a week was impacted by the unprecedented scenario for the entire fourth quarter. Interestingly passenger revenues for the quarter under review are expected to have been upbeat thanks to huge traffic experienced during the Thanksgiving Holiday. With the omicron strain of the coronavirus likely to have a limited impact during the quarter, management is rooting for a pre-tax profit oF $200 million.
Earnings: Stockearning’s Estimated EPS for the fourth quarter is expected to be around $0.11 per share, attributed to the upbeat passenger traffic during the holiday season. During the September quarter, the company reported GAAP pre-tax income of $1.5 billion and diluted earnings per share of $1.89. Adjusted diluted earnings were $0.3 per share.
Revenue: For the December quarter, the company expects passenger revenue of $7.353 billion, implying a YoY increase of 2.3%. In the last quarter, the company had total revenue of $9.2 billion and adjusted operating revenue of $8.3 billion.
Stock movement: Delta Airline shares have lost 4.7% since the company released its last quarter earnings. Notably, DAL shares have been UP 31 times out of the past 48 quarters. So, the historical price reaction suggests a 64% probability of the share price going UP once the company reports its fiscal Q4 2021 earnings. According to the Stockearning algorithm, the predicted first-day move is 3%, while the predicted move on the seventh day is 5%.
What analysts are saying
BofA analyst Andrew Didora upgraded DAL to "Buy" from "Hold" and raised the price target from $46 to $48. The analyst contends that the pooer sentiment in the airlines is likely to set the stage for a trade higher in 1H 2022. "Times of poor sentiment are usually good times to buy airline stocks," the Didora argued. He told investors that he favors Delta over network rivals American Airlines (AAL) and United Airlines (UAL) because of its stronger financial sheet, lower valuation, and more capacity discipline.
Citi analyst Stephen Trent lowered his price target in the stock from $58 to $56 and maintained a “buy” rating on the shares. Although the impact of the omicron variation on demand is difficult to estimate in the short term, Trent writes in a research note that Delta "presented a favorable, long-term picture" in terms of increased passenger demand, higher predicted co-branded card spend, and reduced fuel prices. However, according to the analyst, cost pressure in 2022 is rising greater than Citi had previously projected.
Also, Wolfe Research analyst Hunter Keay upgraded Delta Air Lines from “hold” to “buy” as he upgraded his Airline sector rating from Market Weight to Overweight.
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