Citi lifts Delta Air Lines price target as valuation below pre-pandemic levels

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The analysts explained that in light of the 2023 EPS guide of $6 to $7, free cash flow of $3 billion, and greater strength expected to come next year, they “do not follow fundamental arguments that state that the shares deserve to trade below their pre-pandemic levels.”

“However, Citi’s valuation assumes exactly that, as we concede that elements of the market await greater visibility on end-of-year/2024E strength prior to providing more valuation credit,” they wrote.

According to the analysts, Citi’s 24E EPS and free cash flow estimates for Delta are on track to exceed pre-pandemic 2019 levels “even as valuation remains below the latter period.”

As Delta continues to reach impressive earnings and free cash flow milestones, bearish investors could find fewer reasons to argue that the shares still deserve to trade at a discount vs. 2019,” they concluded.