1 Wall Street Analyst Expects Delta Air Lines Stock to Reach $85. Should I buy?

An analyst at Morgan Stanley has increased Delta Air Lines' (NYSE: DAL) stock price objective from $75 to $85 while maintaining a "overweight" rating on the stock, indicating that the stock has a minimum of 76% upside potential in the next twelve months or so  

Morgan Stanley has a "bull case" scenario where the price may reach $110, which is even better. Currently, the price of a share of Delta is roughly $42.  

Is the goal price reasonable? Do not blindly adhere to the predictions made by Wall Street analysts. Reports of falling air travel due to a worldwide economic downturn may cause analysts to quickly lower their projections, which is a distinct possibility in the extremely cyclical airline sector.  

Having said that, Delta Air Lines stock is very appealing. The air travel industry's steady recovery is being played on. Its earnings potential is changing as a result of its increasing concentration on premium customers.  

Delta can't expand without its loyalty card program. Delta is aiming to increase sales of its premium cabin, which has a greater profit margin, as well as the number of people who use their Delta American Express credit cards, which is a rapidly expanding revenue stream for the airline. This is all part of its SkyMiles reward program. This is a particularly valid point when thinking about the wealthy clients who pay for expensive services.  

By partnering with businesses like Starbucks and providing free WiFi, management is also encouraging the use of SkyMiles, especially among the younger, more travel-conscious consumers. Indeed, the analyst at Morgan Stanley thinks that the stock's upside driver is the focus on expanding luxury cabin sales.  

Delta Air Lines: What's Next? Even after accounting for the potential impact of tighter regulation of the credit card sector, persistently high fuel prices, and a rough landing for the economy, the company appears to be a fantastic deal when traded on less than 7.5 times the projected earnings for 2024  

The stock might be a good investment if Delta is successful in its efforts to increase profits and free cash flow, and if the rebound in the commercial aerospace industry keeps on.  

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