To The Moon

$Delta Air Lines(DAL)$ is expected to release earnings on 10 October 2024 before the market opens (BMO).

DAL last reported earnings on 11 July 2024 before the market opened (BMO). DAL shares declined -4.0% the day following the earnings announcement to close at 44.83.

Following its earnings release, 87 days ago, DAL stock has drifted +9.9% higher. From the time it announced earnings, DAL traded in a range between 37.29 and 52.45. The last price (49.28) is closer to the higher end of range.

Earnings have been catalysts for outsized swings in shares this year, with Delta’s stock gapping down nearly 7% when the company last reported quarterly numbers in July.

Market is expecting an earning per share of $1.54 which is sharp decline of 24.6% from last year’s EPS of $2.03. This significant drop is attributed to rising operational costs and shrinking operating margins, which are weighing heavily on the company’s bottom line.

Delta is expected to post a modest 4.4% increase in revenue, up to $15.2 billion. But I would be expecting Delta CEO to provide a cautious tone regarding the company’s fiscal 2025 outlook, reflecting ongoing concerns over weakening demand for air travel, as well as increasing pressure from higher fuel costs and broader economic concerns.

Options Implied Move Of 6.9% Post Earnings

Market participants expect a sizable swing in DAL stock after the print drops, according to the options market, with a possible implied move of ±6.9% post earnings move, compared to a -4.0% actual move. The options market overestimated DAL stocks earnings move 77% of the time in the last 13 quarters.

The predicted move after earnings announcement was ±4.9% on average vs an average of the actual earnings moves of 3.6% (in absolute terms).

Delta Air Lines (DAL) Price Target Forecast

Based on 14 Wall Street analysts offering 12 month price targets for Delta Air Lines in the last 3 months. The average price target is $61.00 with a high forecast of $85.00 and a low forecast of $52.00. The average price target represents a 23.78% change from the last price of $49.28.

This might be due to the uptrend signal given by the technical indicators, we could see a higher price target post earnings, but the outlook guidance by DAL CEO could cause some correction to the stock price.

Delta Air Lines (DAL) Implied Volatility Skew - Slightly Bearish

The implied volatility skew shows the market's bias for pricing in volatility risk to the option premium of downside puts and upside calls.

The implied volatility for downside puts is increasing relative to upside calls, this suggests the market is pricing in a larger fear to a downside move.

The skew indicator is showing slightly bearish.

Impressive Year To Date Returns On Stock price Might Get Investors Back

With an impressive year-to-date returns on its stock price of more than 25%, DAL could have the investors monitoring how DAL would continue to perform in the future.

There should be normalcy of the travel both domestic and international, but we need to understand how airlines are picking up the speed. I would think that consumer should be travelling as the rate cuts would bring the spending back.

Technical Analysis - MACD and Multi timeframe

From the MTF, it is showing strong upward trend, but one concern to take note is the downward movement detected at the MACD.

There should be interest coming from investors ahead of its earnings release on Thursday (10 Oct), so I believe this might be a good time to start monitoring how DAL would move ahead of its earnings.

Summary

There might be an opportunity to buy DAL at a lower price target ahead of its earnings release, but we need to be careful that there might be only a short surge after its earnings.

Appreciate if you could share your thoughts in the comment section whether you think DAL would provide an earning surprise but stock price could be dragged by a not so positive 2025 outlook.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.