Delta Air Lines: Morgan Stanley Raises Price Targets, Sees Potential for Stock to Reach $110

Morgan Stanley has increased its price target for Delta Air Lines from $77 to $85 and suggests that the stock could potentially reach around $110, compared to its current price of approximately $47.

The analyst highlights Delta’s focus on premium services, projecting that this strategy will enable the airline not only to surpass the increasing demand in the industry but also to garner investor favor, drawing a parallel to Abercrombie & Fitch’s successful transition to a more premium and relevant specialty retailer.

Additionally, Morgan Stanley has raised its “BULL CASE” price target to $110 from $90, expressing confidence in Delta’s resilience and improved business performance post-pandemic.

The firm believes that Delta and the airline industry overall have emerged from the pandemic in a stronger position, benefiting from both structural changes in the industry and internal business adjustments.

Despite Delta’s revenue exceeding pre-pandemic levels and its earnings before interest and taxes (EBIT) essentially returning to pre-pandemic levels, the stock is still trading below its peak price-to-earnings (P/E) ratio of approximately 12x from 2014.