Stocks to buy

Why Delta Air Lines Stock Could Take Flight in 2023

Even a couple of years after the onset of the Covid-19 crisis, U.S. airlines continue to face a range of problems. Delta Air Lines (NYSE:DAL) certainly has its fair share of issues to deal with, so it’s not necessary to load the boat on DAL stock. Still, Delta gets a “B” rating as the company’s management has a bullish outlook for the coming year.

Delta Air Lines CEO Ed Bastian was recently quoted as saying that consumers are “prioritizing investing in themselves and experience.” That’s a bold claim to make during a time of elevated inflation and recession fears.

Yet, Bastian is certainly an insider in the realm of air travel. Delta’s executives don’t have a crystal ball, but they’re intimately familiar with the industry’s day-to-day operations. In light of this, investors might want to get on board and anticipate a share-price takeoff in 2023.

DAL Delta Air Lines $32.23

What’s Happening with DAL Stock?

DAL stock has been directionless lately and will close out the year at a loss. There seems to be some support at $30, but a bounce isn’t guaranteed at that level.

Shares of Delta Air Lines traded near $60 prior to the Covid-19 crisis, but investors shouldn’t expect a return to $60 in 2023. Still, a moderate share-price recovery may be in the offing as Bastian claims, “Demand for air travel remains robust as we exit the year and Delta’s momentum is building.”

Again, Delta’s CEO is optimistic and this should provide encouragement to the company’s disappointed shareholders. Indeed, Bastian’s sunny disposition may be justified. Reportedly, Raymond James analyst Savanthi Syth cited a survey, conducted by his firm, of around 100 investors. Apparently, 56% of them “said they expect to travel more for business trips in 2023.”

DAL’s Optimistic Quarterly and Full-Year Guidance

If there’s a pickup in travel next year, this could give DAL stock a much-needed boost. Delta Air Lines’ management provided forward guidance recently, and investors might want to position themselves for an upbeat quarter and year.

For the December 2022 quarter, Delta raised its guidance in multiple areas:

  • Total revenue increase range raised from 5%-9% to 7%-8%
  • Operating margin raised from 9%-11% to 11%
  • Earnings per share raised from $1-$1.25 to $1.35-$1.40

As for the full year of 2023, Delta Air Lines’ management envisions a “near doubling of adjusted EPS to $5 to $6.” The carrier also forecasts that it will generate over $2 billion in free cash flow in 2023. This should, hopefully, enable “further debt reduction” for Delta.

What You Can Do Now

Whether you want to hold DAL stock now depends of your expectations for the current quarter and the coming year. Does your vision align with the optimistic expectations of Delta’s management?

If so, then feel free to take a moderately sized position in shares of Delta Air Lines. Otherwise, it’s perfectly fine to stay grounded, monitor the data and see how the U.S. airline industry fares in 2023.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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