UPDATE: Deutsche Bank Upgrades Delta Air Lines (DAL) to Buy
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Deutsche Bank analyst Michael Linenberg upgraded Delta Air Lines (NYSE: DAL) from Hold to Buy with a price target of $55.00 (from $47.00).
The analyst comments "We are raising our 12-month price target (PT) on DAL shares from $47 to $55 which is derived by applying a ~7 EV/EBITDAR multiple to our 2022 EBITDAR estimate and a ~5 EV/EBITDAR multiple to our 2023 EBITDAR estimate (which compares to the stock's historical trading range of 5x - 7x, although multiples can trade above the range during a recession/recovery period).represents 10% upside from the stock's last close. The downside risk to our price target is if we fail to see a leveling-off in new COVID-19 cases. Fuel price volatility is also a key downside/upside risk: every 10% move in jet fuel impacts our 2021 EPS estimate by $0.45. Other downside risk factors are economic weakness, government regulation, taxation, airport constraints, safety concerns, the threat of terrorism and war, associated costs/risks with labor negotiations and the revaluation of the stock market resulting in a higher equity risk premium being applied to airline shares."
Shares of Delta Air Lines closed at $45.67 yesterday.
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