In a report published Friday, Morgan Stanley analyst William J. Greene reiterated an Overweight rating on Delta Air Lines (NYSE: DAL), but removed the $55.00 price target.
In the report, Morgan Stanley noted, “On Thursday, DAL hosted investors and analysts at its Investor Day in NYC. We recently reiterated our view that despite a strong 2013 and 2014, there is more room for DAL to run -and the event reinforced the notion that the underlying factors driving the strength in the stock over the last two years remain intact. In our view, mgmt commentary/guidance at Investor Day suggests that there is more DAL-specific alpha, or what we call DALpha, remaining in 2015 and beyond.
"In fact, we continue to see a number of key drivers going forward including: (A) a range of revenue initiatives designed to drive PRASM growth above inflation, (B) a range of cost initiatives designed to drive CASM ex-Fuel growth below inflation,and (C) the discipline to use the cash resulting from the aforementioned margin expansion to pay down debt, return cash to shareholders, and reduce the stock's volatility rather than simply fund capacity growth.
"In short, we view DAL as a best of breed execution story and believe mgmt commentary went a long way to support our view that DAL stands to earn a 'seat at the industrials table'. To hit the point home, weemphasizethat DAL has a lower beta,cheaper valuation, higher FCF yield, pays a larger recurring dividend that is increasing, has a larger,active buyback,and benefits from stronger (and improving) industry fundamentals than many industrial companies. As such, we expect DAL valuation to converge over time toward industrials averages.”
Delta Air Lines closed on Thursday at $48.33.
Latest Ratings for DAL
| Dec 2014 | Credit Suisse | Maintains | Outperform | |
| Dec 2014 | Credit Suisse | Maintains | Outperform | |
| Dec 2014 | Deutsche Bank | Maintains | Buy |
View More Analyst Ratings for DAL
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