Airline stocks United Airlines (UAL) and American Airlines (AAL) soared 14.3% and 12.7%, respectively, on Thursday. Further, Alaska Air (ALK) stock rose 9% and Southwest Airlines (LUV) was up 8%. The upside was due to a bullish earnings report from Delta Air Lines (DAL) that lifted sentiment across the sector.
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Delta’s second-quarter results beat estimates, fueled by a 26% jump in passenger revenue and strong performance in its premium and loyalty segments. Also, Delta reinstated its full-year guidance, projecting $5.25 to $6.25 in earnings per share and up to $4 billion in free cash flow, signaling confidence in sustained travel demand.
This upbeat earnings report eased investor concerns about inflation and tariff-related headwinds. Also, it raised hopes that UAL and AAL will benefit from similar tailwinds when they report earnings.
Despite DAL’s strong results, the Airline sector is in a tough spot. Passenger traffic has rebounded to pre-pandemic levels, but rising fuel costs, weak U.S. leisure demand, and economic worries continue to hurt profits.
Barclays Analyst Ups AAL Stock’s Price Target
Earlier today, Barclays analyst Brandon Oglenski raised the price target for American Airlines stock to $12 from $11. In his preview of the Airline sector’s Q2 earnings, Oglenski noted that rising jet fuel costs and soft demand for U.S. leisure travel could lead to muted earnings outlooks across the sector.
However, he believes that if airlines such as AAL decide to cut capacity in Q4, investors might see that as a smart move to protect profits.
Overall, he sees AAL stock as fairly valued and hence maintains a Hold rating.
Which Airline Stock Is a Good Buy?
According to the TipRanks’ Stock Comparison Tool, UAL, DAL, and ALK score Wall Street’s “Strong Buy” consensus rating, with ALK stock offering the highest upside potential among them.
