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Delta Air Lines (NYSE:DAL) shares were downgraded to Hold from Buy at Argus on Friday based on a weaker outlook.
Analyst John Staszak explained in a research note that Delta, like other airlines, has been hurt by capacity reductions and staffing shortages and recently posted weaker-than-expected 2Q earnings.
“We expect flight demand to remain solid over the remainder of the year, but look for ticket prices to level off as industry capacity expands,” said Staszak. “We also expect Delta and other airlines to face pressure from rising costs, including higher costs for jet fuel.”
As a result, Argus reduced its 2022 EPS estimate to $3.00 from $4.25 and its 2023 estimate to $6.10 from $6.50.
The analyst added that the airline “projects only modest revenue growth in the third quarter” and cautioned that “airline stocks are volatile and suitable only for risk-tolerant investors.”
Delta shares gained 1% Friday.
