Best Airline Stocks To Buy In June

Key Insights

  • United Airlines has recently updated its guidance for the second quarter, highlighting strong demand for air travel. 
  • Analyst estimates for United Airlines and Delta Air Lines are moving higher, which is bullish for these stocks. 
  • Both stocks are trading at an attractive 6 forward P/E. 

The recent moves in the oil markets did not put too much pressure on the shares of airline stocks, which are trading well above March lows on expectations of a strong summer season.

United Airlines Holdings

United Airlines has recently raised its guidance for the second quarter. The company expects that total revenue per available seat mile (TRASM) will increase by 23% – 25% compared to the same period in 2019. The previous guidance called for growth of 17%.

At the same time, United Airlines noted that its average aircraft fuel price per gallon would increase from the previous estimate of $3.43 to $4.02.

As a result, its adjusted operating margin would be near the 10% level, in line with the previous estimate. While high fuel prices hurt profitability, the market is focused on the company’s ability to grow TRASM.

Currently, analysts expect that United Airlines will report earnings of $1.01 per share in the current year and $7.23 per share in the next year, so the stock is trading at an attractive 6 forward P/E.

Delta Air Lines

Analyst estimates for Delta Air Lines have been moving higher in recent weeks. The company is expected to report earnings of $2.85 per share in 2022 and $6.17 per share in 2023, so the stock is trading at 6 forward P/E, in line with United Airlines.

It should be noted that analyst estimates continue to move higher despite the strong bullish trend in the oil markets. At this point, it looks that demand for air travel is strong enough to offset high fuel prices.

However, traders will need to monitor fuel prices closely as an additional upside move could put pressure on analyst estimates and hurt the price of Delta Air Lines stock.

To keep up with the latest earnings updates, visit our earnings calendar.

Best Airline Stocks To Buy In May

Key Insights

  • Earnings estimates for leading airline stocks keep moving higher. 
  • Analysts expect that airline companies have enough pricing power to offset the negative impact of higher fuel prices. 
  • The market also expects a robust rebound of internatinal and business travel, which is bullish for airline stocks.

Airline stocks have recently pulled back due to general market pressure, but the leading stocks in the industry continue to trade well above yearly lows as traders expect strong demand during the summer season.

Delta Air Lines

Analyst estimates for Delta Air Lines contine to move higher at a robust pace. Currently, the company is expected to report earnings of $2.83 per share in 2022 and $6.21 per share in 2023, so the stock is trading at less than 7 forward P/E.

This cheap valuation could be explained by the general market weakness. In addition, some traders are worried that rising oil prices will ultimately hurt profitability, so analysts would have to revise their profit forecasts.

However, it looks that pent-up demand for travelling is strong, so Delta Air Lines should have enough pricing strength to offset the negative impact of rising fuel costs.

Southwest Airlines

The big picture is similar for Southwest Airlines. Analysts estimates have recently moved to new highs due to strong pricing and expectations of the recovery of international and business travel.

The company is expected to report earnings of $2.43 per share this year and $3.77 per share in the next year, so the stock is trading at 12 forward P/E. This is expensive compared to Delta Air Lines, but the premium is explained by Southwest’s lower debt levels, which make it a safer investment.

It should be noted that both stocks have easily outperformed S&P 500 this year, and it looks that they will remain strong performers unless we see a major rally in the oil market.

For a look at all of today’s economic events, check out our economic calendar.

Stock Traders Embrace Themselves For Another Earnings Week

US Stock Markets Fundamental Analysis

Stock bulls are trying to gain back some of the recent losses as Q1 earnings season gets off to a mixed start. As for the war in Ukraine, President Biden announced another +$800 million in weaponry for Ukraine on Wednesday, following an hour-long phone call with the country’s president, Volodymyr Zelenskyy. Biden said the new weapons package will include systems already deployed to the fight, as well as new artillery weapons, artillery rounds, armored personnel carriers and helicopters.

Earnings in Detail

In the USA, the big earnings highlight last week was JPMorgan which posted a -42% profit decline from last year, slightly worse than analyst expectations. Details include more than -$500 million in losses due to market volatility tied to Russia, of which -$120 million is attributed to extreme price moves in the nickel market last month.

Somewhat surprisingly, JPMorgan also took a -$902 million charge that it added to its loan loss reserves, a stark reversal from last year when it released $5.2 billion from its reserves. Executives say it was a preemptive move to guard against the increased odds of a “Fed-induced” recession. CEO Jamie Dimon stressed that they weren’t predicting a recession, but that ongoing inflation, the war in Ukraine, and higher interest rates are “storm clouds on the horizon” that need to be taken into serious account.

At the other end of the spectrum is Delta airlines which topped both earnings and revenue estimates as well as offering an upbeat outlook for next quarter. The airline noted that passenger revenue was running at about 75% of its 2019 levels but expects that to rise to 93% to 97% in Q2.

The reads are for March, which marked the first full month of the Ukraine war and caused gas prices to skyrocket, two things expected to weigh heavy on Consumer Sentiment. I should mention that the producer price index rose +1.4% in March and 11.2% from a year ago. Energy prices were the biggest gainer for the month, rising +5.7%, while food costs increased +2.4%.

Data to Watch

This week the calendar is jam packed for earnings and economic data. On the earnings front, top highlights will include Bank of America, J.B. Hunt, Pinnacle Financial, and Synchrony Financial on Monday; IBM, Halliburton, Hasbro, IBM, Interactive Brokers, Johnson & Johnson, Lockheed Martin, Netflix, and Prologis on Tuesday; Abbott Labs, Alcoa, Anthem, ASML Holdings, Baker Hughes, CSX, Kinder Morgan, Las Vegas Sands, Nasdaq, Procter & Gamble, Randstad Holdings, Robert Half International, Spirit Airlines, Tesla, and United Airlines on Wednesday; Alaska Air, American Airlines, AT&T, AutoNation, Blackstone Group, Charles Schwab, Danaher, Dow, Freeport McMoRan, NextEra Energy, Nucor, PPG Industries, The Progressive, Qualtrics, Quest Diagnostics, Snap, SnapOn, Tractor Supply, and Union Pacific on Thursday; and American Express, HCA Healthcare, KimberlyClark, Schlumberger, and Verizon on Friday.

As for economic data, key releases include the NAHB Housing Market Index on Monday; Housing Starts on Tuesday; Existing Home Sales on Wednesday; the Philadelphia Fed Index on Thursday; and the preliminary reads on IHS Market Manufacturing and Services PMIs. Have a blessed Easter Monday!

Delta Air Lines Is Up By 5%, Here Is Why

Key Insights

  • Delta Air Lines beats analyst estimates on both earnings and revenue. 
  • The company mentions “a strong rebound in demand”. 
  • Airline stocks have a good chance to gain additional upside momentum as traders focus on the upcoming summer season. 

Delta Air Lines Stock Rallies After Strong Earnings Report

We have recently discussed the best airline stocks, and now we have a chance to take a look at the earnings report from one of the leaders in this segment, Delta Air Lines.

Delta Air Lines reported revenue of $9.35 billion and an adjusted loss of $1.23 per share, beating analyst estimates on both earnings and revenue.

The company noted that the strong rebound in demand provided Delta Air Lines with an opportunity to return to profitability in March.

Traders rushed to buy Delta Air Lines stock as the company’s comments highlighted strong demand. Other airline stocks, like Southwest Airlines and United Airlines, have also gained strong upside momentum today.

What’s Next For Delta Air Lines Stock?

The market’s key concern is the impact of rising oil prices on airlines’ profitability. The main question is whether demand is strong enough to offset the negative impact of rising costs.

Delta Air Lines’ report shows that demand rebounds at a robust pace, so it’s not surprising to see that the company’s stock enjoyed strong support today. At this point, the near-term financials are not important as the market is focused on the company’s future performance.

In the next year, Delta Air Lines is expected to report earnings of $5.55 per share, so the stock is trading at roughly 7 forward P/E, which is cheap for the current market environment. Importanly, analyst estimates have started to move higher, which may provide more support to the stock in the upcoming trading sessions.

For a look at all of today’s economic events, check out our economic calendar.

Best Airline Stocks To Buy Now

Key Insights

  • The recent pullback in the oil market provides support to airline stocks ahead of the earnings season. 
  • The upcoming report from Delta Air Lines will determine investors’ mood for the next few weeks. 
  • The key question is whether pent-up demand is strong enough to offset the impact of rising costs. 

WTI oil has recently moved below the $100 level amid concerns over coronavirus lockdowns in China. This move provided some support to airline stocks, which have been under pressure for many months due to rising costs. Let’s take a look at several airline stocks at the start of the first-quarter earnings season.

Delta Air Lines

Delta Air Lines will release its earnings report on April 13, and its stock will likely be active ahead of the earnings report. The company is expected to report a loss of $1.26 per share, but the market will likely stay focused on the comments about the company’s future performance.

Pent-up demand should serve as the bullish catalyst for Delta Air Lines and other stocks in the industry, but it is not clear whether it will be able to offset the negative impact from rising costs. The upcoming report should provide more information on this issue.

Southwest Airlines

Southwest Airlines is another leading airlines stock that could benefit from the recent pullback in the oil market. The stock is down by just 4% year-to-date, which indicates that many investors remain ready to bet on the stock despite the recent developments in the oil market.

Most likely, investors and traders would prefer to bet on bigger companies in the current market environment, which should benefit Southwest Airlines.

The recent action in Jetblue Airways shares highlights this thesis. Jetblue announced that it would buy Spirit Airlines and was immediately punished by the market, which believed that positions of bigger airlines would remain strong in any case and that Jetblue would have been better off concentrating on its existing business.

For a look at all of today’s economic events, check out our economic calendar.

Delta Air Lines Stuck in Major Downtrend

Delta Air Lines Inc. (DAL) kicks off second quarter earnings season in Wednesday’s pre-market, with analysts looking for a loss of $1.26 per-share on $8.95 billion in revenue. If met, the loss-per-share will contract by two-thirds compared to the red ink posted in the same quarter last year.  Despite modest improvement, the failure to rebuild profitability after two years of pandemic struggles highlights continued headwinds in the commercial airline industry.

Refinery Easing Fuel Cost Pressure

The stock rallied 8.7% in mid-March after the carrier reiterated its Q1 forecast, noting that projected 83% capacity was in-line with estimates for 83% – 85%. The company expects positive free cash flow in the quarter, driven by strong spring and summer demand, with total revenue at about 78% of 2019 revenue, compared to an initial forecast between 72% and 76%. Despite this guidance, the expected loss weighed on sentiment, yielding no additional upside into mid-April.

Soaring fuel costs will hurt industry profits but Delta has an advantage over rivals because it owns Monroe Energy, which refines 185,000 crude oil barrels per day. The Philadelphia plant posted losses when crude oil plummeted in 2020 but now marks a major positive, allowing the carrier to control fuel costs over a longer period than hedging contracts. However, high fuel costs are translating into much higher fares throughout the sector, raising doubts about Delta’s projected 2022 passenger counts.

Wall Street and Technical Outlook

Wall Street consensus has brightened considerably in the last three months, lifting to an ‘Overweight’ rating based upon 17 ‘Buy’, 2 ‘Overweight’, and 5 ‘Hold’ recommendations. No analysts are recommending that shareholders close positions and move to the sidelines. Price targets currently range from a low of $39 to a Street-high $67 while the stock is set to open Monday’s session more than $2 below the low target. This dismal placement suggests little downside after this week’s confessional.

Delta Air Lines booked limp returns in the  four years ahead of February 2020’s plunge to a 7-year low in the teens. The subsequent uptick stalled just below the .786 Fibonacci selloff retracement level in April 2021, giving way to a choppy downtick that hit a 14-month low in February 2022. The stock has failed five attempts to mount 200-day moving average resistance, including last week’s reversal and sell gap near 40. This bearish price action tells us the downtrend remains fully intact, despite Wall Street happy-talk.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Why Delta Air Lines Stock Is Up By 9% Today

Key Insights

  • Airline stocks enjoy strong support at WTI oil attempts to settle below the $95 level.
  • Delta Air Lines says that demand stays strong and customers are ready to pay higher fares.
  • Traders should pay attention to the dynamics of Delta Air Lines’ earnings estimates.

Delta Air Lines Stock Rallies As WTI Oil Tests The $95 Level

Shares of Delta Air Lines gained strong upside momentum as WTI oil declined below the $95 level amid hopes for progress in Russia – Ukraine negotiations. Other stocks in the airline segment, like United Airlines Holdings or Southwest Airlines, are also moving higher in today’s trading session.

Airline stocks have taken a significant hit when WTI oil moved towards the $130 level, but the recent strong pullback in the oil market has finally provided material support.

Oil is moving lower as sanctions on Russia did not lead to a complete halt of Russian energy exports, and it looks that energy markets are relieved that the worst-case scenario has not materialized.

It is not surprising to see that Delta Air Lines stock rallied after oil settled below the psychologically important $100 level as energy prices are a key component of the company’s costs.

What’s Next For Delta Air Lines Stock?

Analyst estimates for Delta Air Lines’ earnings have been moving lower in recent weeks due to higher oil prices. Currently, Delta Air Lines is expected to report earnings of $1.65 per share in 2022 and $5.52 per share in 2023, so the stock is trading at 6 forward P/E for 2023.

Today, Delta Air Lines noted that customers were still willing to pay higher prices due to pent-up demand for international travel. These comments provided additional support to Delta Air Lines stock. However, it remains to be seen whether they will provide enough support to analyst estimates which may continue to move lower despite the recent pullback in the oil market as oil prices remain at high levels.

In the near term, Delta Air Lines stock will likely remain highly sensitive to the dynamics of the oil market. In the longer term, traders will pay attention to the dynamics of earnings estimates. If earnings estimates stabilize and start to move higher, the stock will get additional support.

For a look at all of today’s economic events, check out our economic calendar.

Why United Airlines Stock Is Up By 12% Today

Key Insights

  • Oil’s pullback from recent highs provides support to airline stocks. 
  • Earnings estimates will be cut aggressively if oil settles at current levels.
  • Traders should monitor the dynamics of longer-dated oil futures to evaluate market sentiment.

United Airlines Stock Rallies As Oil Pulls Back From Highs

Shares of United Airlines gained strong upside momentum as WTI oil pulled back below the $120 level. Other stocks in the segment like Southwest Airlines or Delta Air Lines have also enjoyed strong support today.

High fuel prices put direct pressure on airlines, so any normalization on this front is bullish for United Airlines and other airline stocks. However, it is too early to tell whether the oil market has calmed down as the current move may be caused by profit taking after the strong rally.

United Airlines stock is down by more than 15% year-to-date, but it remains to be seen whether it will attract speculative traders in case oil prices stay near current levels.

What’s Next For United Airlines Stock?

Analysts expect that United Airlines will report a loss of $0.85 per share in the current year and a profit of $6.62 per share in the next year, so the stock is trading at less than 6 forward P/E.

However, analyst estimates have been moving lower in recent months, and this trend will be continued due to high oil prices. The key question is whether the market will see the current disruption as a longer-term problem.

At this point, crude oil futures indicate that traders expect prices near the $90 level at the end of 2022. In case the price of longer-dated futures contracts moves above the $100 level, airline stocks will find themselves under strong pressure as analysts will likely cut their forecasts aggressively.

In this light, traders will stay focused on geopolitical developments. In case the situation normalizes, energy markets will have a chance to get closer to the previous levels. However, if geopolitical tensions escalate, the situation in the energy markets may get out of control and hurt airlines through lower demand and higher costs.

For a look at all of today’s economic events, check out our economic calendar.

Why Delta Air Lines Stock Is Down By 4% Today

Key Insights

  • Airline stocks drop after Russia attacks Ukraine but rebound from session lows
  • The major conflict adds to uncertainty brought by the coronavirus pandemic
  • Near-term dynamics of Delta Air Lines stock would be determined by general market sentiment, as the direct impact of the conflict is limited

Delta Air Lines Stock Retreats Amid War In Ukraine

Shares of Delta Air Lines gained strong downside momentum at the start of today’s trading session after Russia attacked Ukraine.

Other airline stocks are also moving lower today. American Airlines Group is down by 3% today, while United Airlines Holdings is down by 4%. It should be noted that airline stocks have already moved away from their lows.

The major conflict in Ukraine has already led to cancelled flights in the region of the conflict. Investors fear that the situation may escalate further, and the huge territory of Russia might become unavailable for civil aircraft. Such a scenario is theoretically possible in case sanctions are imposed on Russia’s Aeroflot.

What’s Next For Delta Air Lines Stock?

At this point, it is unclear whether the air traffic will be targeted by sanctions and whether U.S. – based airlines will face any major problems as their main markets are far away from the territory of active combat.

Currently, analysts expect that Delta Air Lines will report earnings of $1.96 per share in the current year, so the stock is trading at 19 forward P/E for 2022. However, earnings are expected to grow to $5.69 in the next year.

The dramatic escalation of the conflict between Russia and Ukraine has already put additional pressure on the market sentiment, so it’s not surprising to see that the whole airline segment was moving lower in today’s trading.

However, the real impact on the financials of Delta Air Lines and other U.S. airlines may be minimal, so their stocks may have a good chance to develop upside momentum in the upcoming trading sessions. The key risk right now is the continued escalation of the current situation in Ukraine, which could put additional pressure on global markets.

For a look at all of today’s economic events, check out our economic calendar.

Delta Air Lines Shares Jump on Earnings Beat, But Flags Omicron Risk

Delta Air Lines shares jumped as much as 4.7% on Thursday after the airline company reported better-than-expected earnings and revenue in the fourth quarter but anticipates making a profit this year as travel demand increases.

The Airline company, which provides scheduled air transportation for passengers and cargo throughout the United States and across the world, reported quarterly adjusted earnings of $0.22 ​​ per share in the holiday quarter, beating the Wall Street consensus estimates of $0.14 per share.

The company said its revenue jumped more than 135% to $9.47 billion from a year ago. That too was above the market expectations of $9.21 billion.

In the first quarter of 2022, the Atlanta-based airline expects revenue to reach 72% to 76% of what it was in 2019. It expects pre-pandemic capacity to be restored to 83% to 85% during this quarter. According to the forecast, the company’s capital expenditures in the quarter will increase by about 69% from the December quarter, according to a Reuters report.

The increasing number of cases of the new Omicron Coronavirus is one of the biggest risks facing the airline industry. After COVID-19 brought the industry to its knees in 2020, American airlines have come a long way. However, the pandemic still lurks in the background.

In a short-staffed industry, a highly contagious virus variant has caused havoc with a new wave of sickness caused by the Omicron Coronavirus. In addition to a spike in daily sick calls, winter storms have also led to massive flight cancellations.

Delta Air Lines shares jumped as much as 4.7% to $42.52 on Thursday. The stock gained over 7% so far this year after falling nearly 3% in 2021.

Executive Comments

“The recent rise in COVID cases associated with the omicron variant is expected to impact the pace of demand recovery early in the quarter, with recovery momentum resuming from President’s Day weekend forward. Factoring this in to our outlook, we expect total March quarter revenue to recover to 72 to 76% of 2019 levels, compared to 74% in the December quarter,” said Glen Hauenstein, Delta’s president.

Analyst Comments

Delta reported 4Q21 revenue of $9.47 billion, above the $9.2 billion consensus but below our estimate of $9.6 billion. Adjusted pretax income of $170 MM was also lower than our $202 MM estimate and below investor day guidance. Delta was on track for a better quarter, but flight cancellations hurt results at the end of the month,” noted Helane Becker, equity analyst at Cowen.

“We believe March will “make” the current quarter as January is likely to be a difficult month given the continued impact of winter weather and the omicron variant. Delta noted they are starting to see fewer sick calls this week among its personnel, so perhaps we are past the peak of employee illnesses. Revenue in the March quarter is forecast to be 72% to 76% of 2019 levels, which is about in line with the 74% recovery in the December quarter. Management is forecasting capacity will be 83% – 85% of 2019 levels; fuel price / gallon of $2.35 to $2.50 and CASM, ex up~15% compared to March 2019. Adjusted net debt is forecast to be ~$22 billion.”

Delta Air Lines Stock Price Forecast

Fifteen analysts who offered stock ratings for Delta Air Lines in the last three months forecast the average price in 12 months of $53.07 with a high forecast of $67.00 and a low forecast of $42.00.

The average price target represents a 26.09% change from the last price of $42.09. From those 15 analysts, 12 rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $60 with a high of $96 under a bull scenario and $33 under the worst-case scenario. The firm gave an “Overweight” rating on the airlines’ stock.

“Why Overweight? Delta Air Lines (DAL) has some of the strongest customer satisfaction numbers among the other Legacy peers, while also commanding a higher PRASM, making it our preferred Legacy carrier. While DAL cannot escape Legacy overhangs (delayed International/corporate recovery, strained balance sheet), it should rise with the industry tide. The risk-reward looks attractive,” noted Ravi Shanker, equity analyst at Morgan Stanley.

Several other analysts have also updated their stock outlook. BofA Global Research raised the price objective to $48 from $46. Bernstein lifted the target price to $67 from $61. Jefferies upped the target price to $50 from $45. Citigroup cut the price target to $56 from $58.

Technical analysis also suggests it is good to hold for now as 100-day Moving Average and 100-200-day MACD Oscillator giving mixed signals.

Check out FX Empire’s earnings calendar

Why Delta Air Lines Stock Is Up By 3% Today

Delta Air Lines Stock Moves Higher After Strong Earnings Report

Shares of Delta Air Lines gained upside momentum after the company released its quarterly results.

Delta Air Lines reported adjusted operating revenue of $8.4 billion and adjusted earnings of $0.22 per share, beating analyst estimates on both earnings and revenue.

The company’s CEO Ed Bastian revealed Delta Air Lines’ view on the impact of the new wave of coronavirus: “Omicron is expected to temporarily delay the demand recovery 60 days, but as we look past the peak, we are confident in a strong spring and summer travel season with significant pent-up demand for consumer and business travel”.

Delta Air Lines expects that its Q1 2022 total revenue would be 72% – 76% of its Q1 2019 revenue due to the negative impact of Omicron. However, it looks that traders are ready to bet that Omicron is a temporary problem and that pent-up demand will lead to a very strong second half of 2022.

What’s Next For Delta Air Lines Stock?

Delta Air Lines stock managed to gain ground at the start of this year despite worries over the spread of Omicron. The market believes that the new variant of coronavirus will not deal significant damage to the economy, so traders are mostly focused on Fed policy.

However, it should be noted that analyst estimates for Delta Air Lines’ 2022 earnings have been trending lower in recent weeks. Currently, the company is expected to report a profit of $2.9 per share in 2022, so the stock is trading at less than 15 forward P/E. Such valuation levels do not look too expensive as Delta Air Lines will likely have a great opportunity to improve its financial performance in 2023.

Most likely, the near-term direction of the stock will depend on market’s view on Omicron. In case the market remains confident that Omicron is not a big problem despite the significant number of new cases, Delta Air Lines stock will have a good chance to develop additional upside momentum.

For a look at all of today’s economic events, check out our economic calendar.

Stock Bulls Remain on Unstable Footing. Here Is Why

The US Consumer Price Inflation Index (CPI) rose 7% over the past year before seasonal adjustments, the steepest climb in prices since June 1982. Stripping out food and energy costs, which tend to be more volatile even in non-pandemic times, inflation rose to 5.5% between December 2020 and December 2021 — the biggest annual jump since February 1991.

Inflation issue

Interestingly, excluding gas and used cars, December inflation was 3.7%. The prices of cars and trucks surged +37% in December, furniture prices hiked +17%, and 49% of small businesses surveyed in December said they will increase the prices of goods and or services sold in 2022.

One thing that is worrisome is the fact protein prices (meat, poultry, fish, and egg prices) have surged +18% since December 2019. Food inflation along with fuel inflation could cause the US consumer to pull back so we need to be paying close attention. But even though prices went through the roof last year, they are still nowhere near the historic highs from the 1980s. Inflation peaked in the spring of 1980 at +14.8%.

Remember, however, then-Fed Chair in the early 80s, Paul Volcker, made it his mission to squash inflation. Volcker raised interest rates to +19% in 1981, prompting a recession, however, in 1982. I’m not looking for any type of crazy rates like back in the early-80’s but if the Fed has to raise rates fast and far enough to stop inflation the economy could certainly feel some negative ripple effects.

Covid influence

I know the second major Covid variant Delta extended the inflationary shock waves and this recent resurgence from Omicron is causing even more supply-side complications. I know many bulls are saying that we are again at peak inflation and we will soon start to ease back but who would have ever thought we would be two years in and still peaking with new daily reported Covid cases at over +1.5 million. If new variants of Covid continue to come in waves who know when inflation peaks…

The government injecting billions of dollars into the economy and paying Americans to stay home via stimulus checks when Covid case numbers started to push past 10,000 daily, and now that we are exceeding one million new cases per day all the talk is about the Fed removing stimulus and the need for Americans to get back to some type of normalcy. Now here we are full-circle… In the famous words of the Grateful Dead, “What a long strange trip it’s been.”

The December Producers Price Index is out today and expected to show an annual inflation rate of +9.8% after hitting +9.6% in November, the fastest pace on record. Higher prices for energy, wholesale food, and transportation and warehousing have been the biggest contributors to the pickup in producer inflation.

Bulls believe that once the current Covid wave subsides, consumers will once again dedicate a higher percentage of their spending to services. That will in turn alleviate the crushing demand being placed on manufacturers and the transportation sector, ultimately helping to bring down prices for both raw materials and labor.

That’s the theory at least. It’s worth noting that that exact pattern was starting to develop late last year as the Delta-driven wave was subsiding and consumers were starting to feel more comfortable doing things like go to restaurants, travel, and visit the gym. As we know, that was totally derailed by the rise of the Omicron variant that is currently roiling nearly every aspect of the global supply chain.

Bulls are cautiously optimistic that the Omicron wave will be short-lived with most experts predicting it will peak by the end of January. The big question is what kind of damage will it do to already overly stressed supply chains in the interim? Inflation trends may also depend on how things shake out in the labor market. If workers remain in short supply and wages continue moving higher, it will likely limit how much inflation eases.

Today, investors will be listening closely to several Federal Reserve members that are scheduled to deliver comments, including Fed Governor Lael Brainard who will testify before the Senate Banking Committee as part of her nomination for Fed Vice Chair.

On the earnings front, the key highlights will be Delta Air Lines and Sanderson Farms.

Delta Air Lines at Cusp of Major Upside

Delta Air Lines Inc. (DAL) kicks off first quarter earnings season in Thursday’s pre-market, with analysts looking for a Q4 2021 profit of $0.14 per-share on $9.29 billion in revenue. If met, that small sum will mark a major turnaround, compared to the $2.53 loss posted in the same quarter last year. The stock sold off nearly 6% in October, despite beating Q3 top and bottom line estimates, after the company warned that rising fuel prices would impact Q4 profitability.

The Future Looks Bright

Major airline carriers are suffering through Omicron-induced disruptions, with sick employees forcing the cancellation of thousands of flights. However, passenger counts have declined for the same reason, making it easier and more profitable for airlines to combine scheduled reservations. In addition, pandemic disruptions should ease as quickly as they appeared, with health experts expecting the variant to peak and turn lower in the next few weeks.

BofA Securities upgraded Delta to ‘Buy’ last week while Jefferies analyst Sheila Kahyaoglu raised her target to $50, noting “Following a challenging 2021 and the ongoing spread of Omicron, 2022 sets the stage for another year of recovery w/airline passenger revenues exiting 2021 ~20% off the peak and slated to be ~5% off by the end of 2022. DAL is our top pick given exposure to transatlantic travel (52% of int’l) and SME corporate travel (50% of corporate), along with the cleanest balance sheet of the network carriers.”

Wall Street and Technical Outlook

Wall Street consensus stands at a ‘Moderate Buy’ rating based upon 13 ‘Buy’, 2 ‘Outperform’, 7 ‘Hold’, and 0 ‘Sell’ recommendations. Price targets current range from a low of $42 to a Street-high $67 while the stock is set to open Tuesday’s session about $1 below the low target. This dismal placement highlights investor caution after multiple variants but could mark a buying opportunity as infection-induced immunity stretches across the planet and new drugs lower COVID’s lethality.

Delta Air Lines recovered about two-thirds of the 70% decline posted in the first quarter of 2020, topping out just above 50 in March 2021. A shallow decline since that time hit a 52-week low in early December, ahead of a bounce that now testing 200-day moving average resistance. Accumulation has barely budged in the last six weeks but that could change if Thursday’s release includes an upbeat assessment of travel demand after Omicron.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

 

Best Stocks, Crypto, and ETFs to Watch – Coca-Cola, Microsoft, Shiba Inu in Focus

First quarter earnings season starts this week, with Delta Air Lines Inc. (DAL) reporting in Thursday’s pre-market session. The stock closed at a two-month high on Friday, despite well-publicized Omicron-induced travel disruptions. Traders and investors are looking beyond the next month of soaring infections and into the summer travel season, in which massive herd immunity could finally put the COVID pandemic in the rear view mirror.

Dow component Coca-Cola Co. (KO) and other dividend payers have roared out of the gates in 2022, marking a widespread rotation into equities that can withstand high inflation. Barron’s magazine noted this trend over the weekend, highlighting Coke’s bullish outlook after sub-par 2020 and 2021 stock performance. Of course, these sleepy plays aren’t for everyone but a little exposure in a long-term portfolio goes a long way toward getting a good’s night sleep during market downdrafts.

2021’s top-performing tech stocks have been sold aggressively so far this year, highlighting a market tendency for one year’s big winners to become the next year’s big laggards. Dow component Microsoft Corp. (MSFT) could defy this trend, with strong cloud division growth expected to continue into 2023. Buying signals haven’t gone off yet for Mr. Softee but the pullback is slowly approaching support near 300 that could offer a low risk buying opportunity.

Shiba Inu (SHIB) has had a tough time since an oversold bounce ended at 0.00004000 on Christmas Eve, shedding more than 30% while breaking short-term support at 0.00002820. Bears could retain control for the next few weeks but there is a potential light at the end of the tunnel because the decline is approaching strong support at the 200-day moving average at 0.00002400, which has narrowly aligned with the .786 Fibonacci retracement of the September into October rally wave.

SPDR Select Sector Utilities ETF (XLU) posted the third highest ETF volume on Friday, bouncing at 69 after a 5-day pullback. The fund has spent the last month testing resistance at the February 2020 high at 71.10, with a breakout setting the stage for the strongest gains since 2019. Natural gas prices haven’t risen at the same rate as other fossil fuels and many of these companies generate power through water, nuclear, and other cheap energies, making them less vulnerable to rising commodity prices.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held Coca-Cola in a family account at the time of publication. 

Earnings Week Ahead: Q4 Season Kicks Off With Delta Air Lines and Big Banks Like BlackRock, Citigroup, Wells Fargo and JPMorgan

This week will also bring us an inflation report, US-Russia talks, and a lot of Fed talks. The following is a list of earnings slated for release January 10-14, along with a few previews. Investors will carefully monitor the latest news on the rapidly spreading Omicron coronavirus variant to see how it affects earnings in 2022.

Earnings Calendar For The Week Of January 10

Monday (January 10)

TICKER COMPANY EPS FORECAST
AZZ AZZ $0.82
CMC Commercial Metals $1.29
TLRY Tilray $-0.09

 

Tuesday (January 11)

TICKER COMPANY EPS FORECAST
SNX TD Synnex Corp $2.6
ACI Albertsons $0.55

 

Wednesday (January 12)

TICKER COMPANY EPS FORECAST
INFY Infosys $0.17
JEF Jefferies Financial Group $1.4
KBH KB Home $1.77
SJR Shaw Communications $0.3
VOLT Volt Information Sciences $0.07

 

Thursday (January 13)

IN THE SPOTLIGHT: DELTA AIR LINES

Delta Air Lines, one of the major players in the United States aviation industry, is expected to report earnings per share (EPS) of $0.11 in the fourth quarter, more than doubling compared to a huge loss of $-2.53 per share seen in the same period a year ago.

The Airline company, which provides scheduled air transportation for passengers and cargo throughout the United States and across the world, is forecast to report revenue growth of over 130% to around $9.2 billion. It is worth noting that in the last two years, the airline has beaten consensus earnings estimates just four times.

According to ZACKS Research, based on strong passenger demand during the holidays, Delta Air Lines raised its guidance for the fourth quarter of 2021. It hopes to achieve “meaningful” profitability in 2022 despite Omicron-induced woes. In the December quarter, the airline expects to make approximately $200 million in adjusted pre-tax profit, according to an SEC filing.

Compared to the same period last year, Delta expects to recover 74% of its adjusted total revenues (excluding third-party refinery sales) in the fourth quarter. In 2022, DAL expects its capacity to reach approximately 90% of its level in 2019. In 2023 and beyond, it expects to achieve pre-pandemic levels of capacity. With adjusted revenues (ex-refinery) exceeding $50 billion in 2024, the company expects earnings per share to surpass $7, ZACKS analysts noted.

“Mgmt. laid out a plan to meet and exceed pre-pandemic financial benchmarks by 2024 by building a best-in-class premium airline. The plan is sound and targets appear conservative though the near-term trajectory remains outside of mgmt.’s control. We see line of sight to the stock doubling from here,” noted Ravi Shanker, equity analyst at Morgan Stanley.

“Why Overweight? Delta Air Lines (DAL) has some of the strongest customer satisfaction numbers among the other Legacy peers, while also commanding a higher PRASM, making it our preferred Legacy carrier. While DAL cannot escape Legacy overhangs (delayed International/corporate recovery, strained balance sheet), it should rise with the industry tide. The risk-reward looks attractive.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 13

TICKER COMPANY EPS FORECAST
TSM Taiwan Semiconductor Manufacturing $1.14

 

Friday (January 14)

IN THE SPOTLIGHT: BLACKROCK, CITIGROUP, JPMORGAN, WELLS FARGO

BLACKROCK: The world’s largest asset manager is expected to report its fourth-quarter earnings of $10.14 per share, which represents a year-on-year decline of about 0.4% from $10.18 per share seen in the same period a year ago.

The New York-based multinational investment management corporation would post revenue growth of nearly 15% to around $5.15 billion. The company has been able to beat earnings per share (EPS) estimates most of the time in the last two years.

“We believe BlackRock (BLK) is best positioned on the asset mgmt barbell given leading iShares ETF platform, multi-asset & alts combined with technology/Aladdin offerings that should drive ~11% EPS CAGR (2020-23e) via ~6% avg LT organic growth,” noted Michael Cyprys, equity analyst at Morgan Stanley.

“We see further growth ahead for Alts, iShares, international penetration, and the institutional market in the US. Recently acquired Aperio also bolsters solutions offering and organic growth. We expect the premium to widen as BLK takes share in evolving industry and executes on improving organic revenue growth trajectory.”

CITIGROUP: The New York City-based investment bank is expected to report its fourth-quarter earnings of $1.87 per share, which represents a year-on-year decline of about 10% from $2.07 per share seen in the same period a year ago. But the U.S. third-largest banking institution would post revenue growth of nearly 4% to $17.06 billion.

“While the stock is cheap at 0.6x NTM BVPS, and new CEO is taking strong, proactive strategic action to boost returns closer to peers, we believe these actions will take time to play out,” noted Betsy Graseck, equity analyst at Morgan Stanley.

Citi is exiting 13 consumer businesses in Asia and EMEA, and focusing on higher growth areas of US consumer, Asia WM, International wholesale and consumer payments. These actions could drive ROE higher than the 9% we are modelling for 2023, but we expect the stock will only start to fully reflect this once revenues begins to accelerate. Citi benefits less than peers from higher rates, and we expect some of our more rate sensitive stocks will outperform as the Fed begins to raise rates next year.”

JPMORGAN: The leading global financial services firm with assets over $2 trillion is expected to report its fourth-quarter earnings of $2.94 per share, which represents a year-on-year decline of over 20% from $3.79 per share seen in the same period a year ago. But one of the world’s oldest, largest, and best-known financial institutions would post revenue growth of just over 2% to $29.9 billion.

WELLS FARGO: The fourth-largest U.S. lender is expected to report its fourth-quarter earnings of $1.11 per share, which represents a year-on-year growth of over 70% from $0.64 per share seen in the same period a year ago. The San Francisco, California-based multinational financial services company would post revenue growth of more than 4% to $18.8 billion.

Wells Fargo (WFC) benefit to EPS from rising rates is the highest in the group, with each ~50bps increase in FF driving ~15% increase in EPS; 50bps in long-end rates drives ~7% to EPS WFC is in a strong position to monetize higher rates, as cash stands at 15% of earning assets, 7% points above pre-pandemic levels,” noted Betsy Graseck, equity analyst at Morgan Stanley.

WFC is taking action to restructure its business mix as it works to exit the Fed consent order/asset cap and reduce its expense base. Excess capital at Wells stands at 10% of market cap vs. 5% for median Large Cap Bank, enabling a net buyback yield of 10% in 2022 and a total cash return of 12%. Risks around the timing of asset cap removal and further regulatory action remain.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 14

TICKER COMPANY EPS FORECAST
C Citigroup $1.87
JPM JPMorgan Chase $2.94
BLK BlackRock $10.15
WFC Wells Fargo $1.11

 

Sector Themes In Play In The Markets For 2022

Years like 2021 saw a solid broad-based performance in many stock market sectors. Relatively simple approaches such as Indexing and Sector Rotation did well. But with macro changes in play and many uncertainties for 2022, we may very well see broad indexes underperforming while individual sectors dominated by a few stocks really shine.

Dips will continue to be bought unless something significant changes. But let’s not forget that we’re long overdue for a substantial correction. Significant risk catalysts are:

  • Fed actions.
  • International conflicts (i.e., Russia and China).
  • Pandemic developments that are not currently known.

There’s always the risk of the unknown – the literal definition of a “Black Swan” event. We shouldn’t get too complacent, knowing that we may need to get defensive to protect capital suddenly. When it’s time to be defensive, let’s not forget that CASH IS A POSITION!

Sector theme DRIVERS FOR 2022

Many uncertainties about Covid and the lingering effects on the economy remain. Inflation has roared back to 30-year highs. Strong employment numbers and consumer spending are fueling significant growth in corporate earnings. We also have a shift in bias at the Fed on interest rates and quantitative easing. These are the “knowns” and are theoretically priced in.

For these reasons and more, we should expect more of a “Stockpicker’s Market” in 2022. Certain sectors will do well and weather corrections better than the broader markets.

Even short-term traders can gain an edge by paying attention to what sectors are strongest. Traders tend to benefit most from playing the strongest stocks in the strongest sectors for bullish trades and choosing the weakest stocks in weaker sectors for bearish trades. That “tailwind” can make a significant difference in results.

Let’s look at some sector themes and individual names to keep an eye on in 2022.

ECONOMIC NORMALIZATION

A long-anticipated return to a “normal” economy will continue to be a theme — we just don’t know if that will be Post-Covid or Co-Covid. Or when. Air travel, theme parks, hotels, cruise lines, etc., have all suffered in the persistent Pandemic. What does seem to be changing is the idea of a “new normal” where virus variants may be with us for years to come. We will adjust socially and economically to that for the foreseeable future. DAL, UAL, LUV, AAL are airlines to watch, and the JETS ETF may be a good way to play a general recovery in this sector.

5G INTERNET

The much-hyped rollout of 5G network technology had its share of setbacks and technology disappointments. But 2022 should see the 5G deployment start to take off as technical issues are worked out, and the promise of widespread coverage with transformational performance becomes real. In the background supplying the 5G infrastructure are AMD, QCOM, ADI, MRVL, AMT, XLNX, and KEYS. Along with infrastructure and testing companies, shares of major carriers T, TMUS, and VZ languished for much of the second half of 2021 and looked poised for recovery in the coming year.

ARTIFICIAL INTELLIGENCE

In all its various forms (including autonomous vehicles), AI will remain a developing trend. Big players in the space to watch include MSFT, AMAT, GOOGL, NVDA, AAPL, and QCOM.

EVs and AUTONOMOUS VEHICLES

Electric Vehicles (EVs) are nearing an inflection point where widespread adoption is poised to take off. Technology and cost competitiveness has improved where some EVs will reach price parity with their traditional internal combustion counterparts.

While there are many smaller players in the EV space, automotive stalwarts F, GM, and TM are investing very heavily. TSLA has been grabbing the headlines, but many others want to stake out their territory in the space, including whole tiers of manufacturers and infrastructure enablers like WKHS, XPEV, NKLA, and CHPT.

MATERIALS and MINING

Gold, silver, and related miners underperformed for much of 2021 and now look poised for a recovery year as inflation, and monetary concerns grow. GLD, SLV, GDX, GDXJ, SIL, SILJ look good as both longer and mid-term plays. Metals and miners may get hit initially with a significant downturn in stocks but could ultimately demonstrate their safe-haven potential.

Specific to the growth in EVs, battery technology, etc., copper, lithium, and related basic materials should see stronger demand ahead. FCX looks particularly interesting as a dual play on gold and copper. LIT may be a good ETF play on lithium battery technology.

SEMICONDUCTORS

The market for chips is primed for exponential growth. EV’s have about ten times the number of specialty semiconductors as conventional vehicles. AI, crypto, 5G, mobile devices, and ubiquitous computing should drive growth in the semiconductor sector for some time to come.

REAL ESTATE

Real Estate and Homebuilders should continue to do well while employment numbers remain strong and if interest rates don’t rise too quickly. The inventory shortage in most real estate markets will likely persist well into the new year.

Storage REITs like PSA, LSI, and CUBE have been big winners in the Covid economy and still have room to run.

SUMMARY

Many sectors still look bullish after gains in 2021. But there are “storm clouds” on the horizon, and we must not take future performance for granted.

Lastly, one of the simplest ways to assess how sectors are measuring up is to watch the charts for the S&P SPDR series sector ETFs and a few others. Here are some notable ones to watch:

https://www.thetechnicaltraders.com/wp-content/uploads/2021/12/Dec-31-article.png

These can give us a good starting place to look for leading stocks in winning sectors as the year unfolds.

Let’s remain vigilant for possible market corrections and may the wind be at our backs!

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Founder & Chief Market Strategist
TheTechnicalTraders.com

 

Airline, Cruise Stocks Suffer as Omicron Spike Chokes Holiday Travel

Airline and cruise stocks tumbled on Wednesday after continued flight cancellations and sailing halts due to adverse weather conditions and the ongoing COVID-19 crisis caused by the spread of the Omicron variant.

According to Reuters, flight-tracking website FlightAware.com reported that nearly 800 U.S. airlines cancelled flights Wednesday morning, and 1,120 flights were delayed. On Tuesday, Delta Air Lines and Alaska Air Group cancelled hundreds of flights, while Southwest Airlines cancelled only a few flights. This was caused by adverse weather conditions and an increase in Omicron cases.

“As European nations mull tighter restrictions to contain the spread of the Omicron variant, experts anticipate a similar trend in the U.S. and across the world in the coming months. As investors speculate a slower recovery timeline for the travel industry, the shares of Southwest Airlines have lost a quarter of their value since November,” noted analysts at TREFIS.

“However, the passenger numbers at TSA checkpoints are just 15% below pre-pandemic levels – indicating strong air travel demand despite heightened fears and tougher Covid norms. Notably, Southwest Airlines stock has lost $11 billion in market capitalization since February 2020 despite burning just $1.1 billion of operating cash over the period. Also, the domestic business contributes almost 97% of Southwest’s revenues and is likely to support earnings amid international travel blockades. Considering the negative impact of the Omicron variant for a quarter, Trefis believes that there is a sizable upside in Southwest Airlines stock.”

On Wednesday, Delta Air Lines stock closed 1.21% lower at $39.15, Alaska Air Group ended 1.46% down at $52.13 and Southwest Airlines finished 0.31% lower at $42.16.

In addition to cancelling 170 flights, Alaska Airlines has warned of more cancellations and delays throughout the week, while Delta plans to cancel 250 of 4,133 flights on Tuesday.

Moreover, Cunard, a cruise company owned by Carnival Corp., announced that the Queen Mary 2 would skip a scheduled stop in New York and instead remain in Barbados until Jan. 2. On Wednesday, Carnival Corp closed 0.48% lower at $20.80, Norwegian Cruise Line ended 1.53% down at $21.57 and Royal Caribbean down 0.04% at $78.22.

According to the US Centres for Disease Control and Prevention (CDC) as of Tuesday, 86 ships had been investigated, and three more were being monitored for cases of COVID-19. As a precautionary measure, the company added more crew members but did not elaborate on why more workers were needed.

A temporary ban on cruising may be reintroduced by U.S. health authorities as a result of the spread of the Omicron variant, just months after cruise companies resumed operations.

Check out FX Empire’s earnings calendar

Why Delta Air Lines Stock Is Under Pressure Today

Delta Air Lines Stock Is Losing Ground After Turbulent Weekend For Airlines

Shares of Delta Air Lines found themselves under pressure after flight cancellations during the Christmas weekend highlighted the risks posed by the spread of Omicron.

Most airlines blamed staffing shortages due to coronavirus for their problems. Not surprisingly, the whole sector is under pressure today, and other stocks like United Airlines, Southwest Airlines and JetBlue are also losing ground in today’s trading session.

It remains to be seen whether this problem will be a long-term one as Christmas weekend is one of the busiest periods for the airline industry, and the situation will likely normalize in the upcoming weeks. However, the disruptions highlighted risks posed by Omicron, and investors may remain worried about similar incidents in the future.

What’s Next For Delta Air Lines Stock?

Analysts expect that Delta Air Lines will report a loss of $4.28 per share in 2021 and a profit of $2.91 per share in 2022, so the stock is trading at roughly 13 forward P/E.

However, it should be noted that earnings estimates for 2022 have been steadily declining in recent months. The reason for this decline is simple – the situation with coronavirus is not improving, while the wave of Omicron boosted risks of additional restrictions, especially for the lucrative international travel segment.

It remains to be seen whether traders will rush to buy shares of Delta Air Lines and other airline stocks after the recent pullback. While airlines should quickly adapt to new challenges as they have a significant experience of dealing with various crises, falling earnings estimates may continue to put pressure on their stocks. The good news for investors is that there is no evidence of big problems on the demand side as pent-up demand for travelling stays strong despite risks posed by the spread of Omicron.

For a look at all of today’s economic events, check out our economic calendar.

Delta Airlines Expects Profits Next Year, Predicts Limited Omicron Impact

The Coronavirus vaccine seemed to have eased affairs, and many industries are starting to reopen. However, the emergence of the Omicron variant poses a threat to normalcy, and some companies could feel its impact.

Delta Airlines Expects to Generate Profits in 2022

Delta Airlines Inc. announced earlier today that it expects to generate profits next year despite the Covid variant affecting activities. The company said it is recording strong domestic flight bookings in the current quarter.

According to Delta Airlines, the Omicron Variant has slowed international bookings at the moment as some countries have imposed new travel restrictions. However, the company expects a limited hit from Omicron in the coming year.

Chief executive officer Ed Bastian told CNBC that “Omicron [is] not going to impact our holiday bookings.” Delta Airlines expects to generate $200 million as pretax profits in the fourth quarter of 2021.

The company told the United States SEC in a recent filing that its executives will outline its plan to boost profits next year and surpass pre-pandemic levels by 2024.

Business Travel is Resuming

Bastian told CNBC that business traveling volume is currently about 60% of 2019 levels, and he expects it to stay around that range over the next few months. Meanwhile, small business travel is about 75% of 2019 levels as the demand is higher compared to the larger companies.

DAL’s stock chart. Source: FXEMPIRE

Delta Airlines’ stock price has been underperforming over the past few hours despite the CEO’s recent projection. At press time, DAL is trading at $35.83, down by more than 2% over the past 24 hours.

The stock has underperformed since the start of the year, losing more than 10% of its value during that period. The dip is due to the pandemic affecting the travel industry. DAL could suffer further losses in the coming weeks as the Omicron variant is causing concerns amongst businesses around the world.

Why Delta Air Lines Stock Keeps Moving Higher

Delta Air Lines Stock Rallies As U.S. Opens Up For International Travel

Shares of Delta Air Lines gained strong upside momentum as U.S. lifted pandemic travel restrictions which means that international visitors could visit the country. While U.S. has imposed certain rules, including a vaccination requirement, the move is expected to lead to a significant boost to airlines’ revenue due to pent-up demand.

Recent news from Merck and Pfizer, who presented positive results of their coronavirus treatments, also boosted sentiment in the travel and leisure segment.

It should be noted that while Delta Air Lines stock managed to move from the $40 to the $45 level in several trading sessions, it continues to trade well below yearly highs near the $52 level that were reached back in March.

What’s Next For Delta Air Lines Stock?

Currently, analysts expect that Delta Air Lines will report a loss of $4.57 per share in 2021. The company is expected to return to profitability in 2022 and report earnings of $3.47 per share, so the stock is trading at 13 forward P/E.

It should be noted that earnings estimates have been moving lower in recent weeks as challenges like labor shortage, global supply chain disruptions and high oil prices hurt outlook for airlines’ profitability.

U.S. decision to open the country for international travellers will likely lead to a material increase in demand for Delta Air Lines services. It remains to be seen whether problems like labor shortage will hurt profitability and performance, but it looks that traders are ready to think about longer-term potential and ignore temporary challenges.

S&P 500 is trading at all-time high levels, and traders search for stocks which have not reached sky-high valuation levels and have the opportunity to grow. In this environment, Delta Air Lines stock and other stocks of the segment have a chance to attract more traders’ interest and develop additional upside momentum.

For a look at all of today’s economic events, check out our economic calendar.