Bernstein Flags Fuel Headwinds but Stays Bullish on Delta’s (DAL) Flight Path

Delta Air Lines Inc. (NYSE:DAL) is one of the 10 most undervalued industrial stocks to buy according to analysts. On June 18, Bernstein analyst David Vernon revised his near-term view on Delta Air Lines, trimming the price target slightly to $60 from $61 while maintaining an Outperform rating.

The analyst’s downward adjustment to the target price reflect his latest hike in fuel cost estimates. He attributes the rise to the growing geopolitical risks and the ongoing tensions between Iran and Israel. The analyst notes that while airlines can typically pass fuel costs onto consumers through higher fares, in such scenarios, the pricing power weakens, especially if geopolitical concerns hit traveler sentiment. Thus, it becomes difficult for companies to pass on the costs to consumers during supply-driven price shocks.

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Bernstein also notes that the continued uncertainty in the Middle East could dampen demand during the summer travel period which is important for the sector. This adds another layer of complexity to forecasting near-term performance, prompting a more cautious stance in earnings estimates.

Despite these pressures, Vernon’s overall rating remains positive, suggesting confidence in Delta’s longer-term positioning and operational strength even as short-term headwinds persist.

Delta Air Lines Inc. provides scheduled air transportation for passengers, freight, and mail over a network of routes.

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