Shares of Delta Air Lines (DAL) surged in today’s trading after Fitch Ratings upgraded the airline from junk status to a “rising star” with a second investment-grade rating. Delta’s credit rating was lifted to BBB- due to significant improvement in its credit metrics post-pandemic, which includes reducing gross debt and operating leases by around $11 billion over the past three years.
Delta was previously downgraded to junk by Fitch and S&P Global Ratings in 2020 during the Covid-19 crisis. However, it now holds the highest junk rating from S&P and a Baa3 investment grade from Moody’s. In addition, the recent upgrade re-establishes Delta as a blue-chip company and makes its debt eligible for high-grade indexes like Bloomberg’s.
Fitch anticipates Delta’s leverage to decline to the mid-to-low 2x range within the next 18 months due to Delta’s solid performance and focus on debt reduction, which saw a $6 billion decrease in the last year and a half.
Investor Sentiment for DAL Stock
The sentiment among TipRanks investors is currently positive. Out of the 746,050 portfolios tracked by TipRanks, 1% hold DAL stock. In addition, the average portfolio weighting allocated towards DAL among those who do have a position is 5.2%. This suggests that investors of the company are fairly confident about its future.
Furthermore, in the last 30 days, 2.6% of those holding the stock increased their positions. As a result, the stock’s sentiment is above the sector average, as demonstrated in the following image:
Is Delta Stock a Buy or Sell?
Overall, analysts have a Strong Buy consensus rating on DAL stock based on 11 Buys assigned in the past three months. After a 15% year-to-date rally, the average DAL price target of $63.25 per share implies 37.68% upside potential.
