major usa Airlines experienced a slowdown in travel demand last year following significant losses due to COVID-19 travel restrictions. However, staffing issues, high fuel costs, weather disruptions, and capacity restrictions have adversely affected airlines.use TipRanks Stock Comparison Toolwe pit Delta Airlines (New York Stock Exchange: Dar), United Airlines (Nasdaq: UAL), and American Airlines (Nasdaq: AAL) to each other to find Wall Street’s favorite airline picks for 2023.
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Delta Air Lines (NYSE:DAL)
delta airlines Exceeded analyst expectations for Q4 2022 For strong travel demand. Additionally, the airline paid off his total debt of more than $5 billion in 2022 full year. But investors were disappointed with Delta’s Q1 2023. Earnings guidance.
Nonetheless, the carrier has revenue growth in the range of 15% to 20%, EPS of $5 to $6, and free cash flow Delta also assured investors that in 2024 it expects to achieve EPS of over $7 and free cash flow of $4 billion.
Is DAL stock a buy?
Morgan Stanley Analysts Despite Weak Q1 2023 Guidance Ravi Shankar We remain bullish on Delta. Analysts feel the market may focus on accelerating earnings momentum throughout the year beyond a weak start to the year.
Shankar said, “With the December storm and pilot contracts completed (assuming successful ratification), it is clear that the DAL will perform and do its best…earning $7 in EPS. It flies major airline franchises on the way.” Shanker reaffirmed Delta’s buy rating with a target price of $65, calling it the sector’s top pick.
Wall Street’s strong buy consensus rating for Delta Air Lines is based on 12 buys and 1 hold. At $50.54, the average DAL stock price target Implying a 26.7% upside potential. Stocks are up more than 21% since the beginning of the year.
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United Airlines (NASDAQ:UAL)
Despite the disruption caused by winter storms, United Airlines beats Wall Street expectations for Q4 2022 Announced a positive outlook for the first quarter of 2023. Liquidity reached $18 billion at year-end 2022, reducing adjusted net debt by $3.3 billion.
United believes it can achieve its 2023 adjusted net debt to EBITDAR ratio (excluding interest, taxes, depreciation, amortization, restructuring or rental expenses) of less than three times its target.
Additionally, adjusted EPS for 2023 is in the $10 to $12 range, well above Street’s estimate of $6.84.United expected to generate positives free cash flow This year, despite an adjusted capital expenditure estimate of about $8.5 billion.
What is UAL’s target price?
Bernstein analyst David Vernon United Airlines stressed that it delivered strong results, even when measured against his “bullish” estimates. “United is committed to international growth in 2023, leveraging investments made during the pandemic to deliver a return to profitability that far exceeds market expectations,” Vernon said. rice field.
Vernon believes investing in UAL could be a “good idea” given that “earnings power recovers sooner than expected at this valuation.”
UAL earns a Medium Buy Consensus Rating based on 7 purchases, 4 holds, and 1 sale.average UAL stock price target $55.55 suggests a 6.2% upside potential. Shares are up nearly 39% year-to-date.
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American Airlines (NASDAQ:AAL)
Strong travel demand and higher fares helped American Airlines reports fourth quarter 2022 earnings beat expectations., earnings were basically as expected. The company expects a strong demand environment to continue this year. We also expect demand for long-distance international travel to further improve.
American Airlines is focused on improving its financial position. By the end of 2022, American Airlines will have Over $8 billion in total debt From peak levels in Q2 2021. He is more than half of his goal of reducing total debt by $15 billion by the end of 2025.
Is the AAL Buy, Sell or Hold?
Following the printing of the fourth quarter, Susquehanna analysts Christopher Stathoropoulos He said free cash flow outlook for 2023 is about $3 billion, better than he expected. Nonetheless, analysts feel the guidance points to relatively low spending on aircraft, given delays in MAX deliveries and direct leasing of some widebodies.
Analysts have raised estimates for American Airlines, but feel Delta has a better risk-reward profile. .
Wall Street has been sidelined by American Airlines with a hold consensus rating based on 1 buy, 7 holds and 2 sells.average AAL stock price target $16.89 means the stock could be range bound in the near future. Shares up 34% so far in 2023.
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Conclusion
Shares of Delta Air Lines, United Airlines and American Airlines have risen so far this year. Nonetheless, analysts are more bullish on Delta and see a higher stock upside potential than United and American. Delta expects improved earnings, earnings and free cash flow this year.
Analysts aside, hedge funds are also bullish on Delta, adding 2 million more shares last quarter. According to TipRanks’ Hedge Funds Trading Activity Tool, Delta’s confidence signal is very positive.