BofA Securities analyst Andrew G. Didora reiterated a Buy rating on the shares of Delta Air Lines Inc (NYSE:DAL) and raised the price target from $53 to $55.
Yesterday, Delta reported a first-quarter 2024 operating revenue growth of 8% year-over-year to $13.748 billion, and the adjusted EPS was $0.45, above the consensus of $0.36.
Both the unit revenue and unit cost outlooks were about 100 basis points better than the analyst modeled, which drove the EPS upside.
The analyst thinks there were more pros than cons in DAL’s outlook, giving the confidence to raise 2024E EPS to $6.81 from $6.57.
DAL’s demand commentary was better than feared, as transatlantic and premium products remain robust, each a revenue tailwind offsetting pressure from Latin America, noted the analyst.
The analyst estimates 2Q24 capacity growth of +6.9%, the high end of DAL’s +6%-7% range, and unit revenue growth of -90 basis points, in line with DAL’s flat to -2% guide.
Better unit cost control is encouraging and reflects solid operations and an increasing focus on efficiency, said the analyst.
The analyst is in agreement with the management’s debt reduction focus and sees it as a further de-risking mechanism against the cyclicality of DAL’s business.