One Wall Street analyst sees 17% upside for Delta Air Lines shares

Delta Air Lines (Delta)Air Lines (NYSE: DAL) (NYSE: DAL)Delta Air Lines, Inc. (Delta Air Lines) reported outstanding earnings last week-$0.45 per share (adjusted for one-time items), beating most Wall Street analysts' forecasts for the airline by a full $0.10. Delta followed up its good news in the first quarter by forecasting that earnings for the second quarter and full year 2024 would also beat expectations, prompting a series of upgrades on Wall Street.

Of note, Susquehanna's Christopher Stathoulopoulos raised his target price for Delta Air Lines shares to $55, and otherseveral bitsBank analysts agree with this prediction. If their forecast is correct, Delta stock should rise more than 17% above its current price over the next 12 months.

Is Delta Air Lines stock worth buying?

They(used form a nominal expression) Was the prediction correct?

In Stathoulopoulos' note, he argues that Delta is optimizing its operations this year, aiming to improve rates and profits (which, if successful and sustainable, should lead to a higher stock price).

Delta Air Lines is well on its way to achieving this goal. In last week's report, Delta pointed to strong demand from both domestic and international passengers, with demand from business passengers, a key profit driver, up 14%. Admittedly, total revenue per available seat mile (TRASM), a key measure for airline stocks, grew only 11 TP3T year-over-year, but total revenue per available seat mile (TRASM) increased by 4.5 TP3T year-over-year.(manufacturing, production etc) costs It's down. 6%, Delta's aircraft fuel costs are alsoIt's down. 6%, which helped improve Delta's profitability (Delta lost money in the first quarter of last year).

Assuming everything goes according to plan, Delta should earn at least $6 per share this year, which means a P/E ratio of less than 10, even at Stathoulopoulos' projected share price of $55. While it's true that Delta is saddled with a heavy debt load, much of it for surviving a pandemic, it expects to generate between $3 billion and $4 billion in free cash flow this year - money that can be used to pay down debt and maintain a (hopefully) meager dividend increase of 0.8%. free cash flow - money that can be used to pay down debt and maintain a (hopefully) meager 0.8% dividend increase.

I admit: I am not as optimistic as Stathoulopoulos about the long-term value of Delta Air Lines. But the current share price looks reasonable. If Delta pays more dividends, I might even buy.

Should you invest $1,000 in Delta now?

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Rich Smith does not own any of the aforementioned stocks.The Motley Fool recommends Delta Air Lines.The Motley Fool has a disclosure policy.

A Wall Street Analyst Says Delta Air Lines Stock Has 17% of Upside was originally published by The Motley Fool.