Key Takeaways
- Morgan Stanley made Delta Air Lines a top pick for 2024, pointing to the air carrier’s focus on selling premium products to customers.
- The analysts boosted their price target on the stock by $8 to $85, and said their “bull case valuation” is now $110, up from $90 a share and more than double the stock’s level on Monday.
- Morgan Stanley added that Delta also has benefited from targeting younger fliers following the pandemic.
Delta Air Lines (DAL) shares rose Monday after Morgan Stanley named it as a top pick for 2024, saying the carrier is benefiting from sales of its premium offerings to passengers.
The analysts also raised their price target on the stock to $85 from $77, and lifted their “bull case valuation” to $110 from $90—with the new best-case scenario more than twice Delta’s stock price Monday.
Delta shares gained 0.7% to close Monday at $48.22, after rising as high as $49.20 during the session. The stock is trading at its highest level since last July,
Morgan Stanley compared Delta with retailer Abercrombie & Fitch (ANF), arguing that Delta’s push into premium products “will not just allow them to outperform the rising tide of Airlines demand growth, but will also be rewarded by investors in much the same way that Abercrombie & Fitch’s (ANF) recent reinvention as a more premium and relevant specialty retailer has been rewarded by investors.”
The report noted that along with its focus on selling higher-priced options, Delta also has targeted younger fliers post-pandemic. It said both of those actions have increased ancillary revenue, especially with its American Express (AXP) credit card partnership, at the same time Delta has worked to reduce network and fleet complexity.
Morgan Stanley continued to give Delta an “overweight” rating.
TradingView