Delta Stock Hits Seven-Year Bottom After Ditching Boeing 777

A round of overdue bear notes could add turbulence to DAL

by Jake Scott

Published on May 14, 2020 at 2:20 PM
Updated on Jun 24, 2020 at 10:16 AM

The shares of Delta Air Lines, Inc. (NYSE:DAL) are down 1.3% to trade at $18.91 today, after the airliner's board authorized plans to retire the company's Boeing (BA) 777 aircraft and withdraw them from service by the end of 2020. "We plan to continue to consider further opportunities for early aircraft retirements in an effort to modernize and simplify our fleet in the future," the airliner announced. Meanwhile, Delta expects to record non-crash impairment charges in relation to the 777 between $1.4 and $1.7 billion, before tax. 

Delta stock -- like most in the airline sector -- has had a rough go of it on the charts in the past few months. After a rejection by the $60 level in mid February, the shares have tumbled 67%, culminating in a seven-year low of $17.51 earlier today. Thwarting breakouts along the way have been DAL's 40-day moving average, a trendline not conquered on a closing basis since that aforementioned February bear gap.

DAL Chart May 14

Despite the steep year-to-date deficit, analysts optimism surrounding DAL is high. Of the 11 in coverage, seven brokerages sport a "buy" or better, while the remaining all say "hold." Plus, the 12-month consensus target price of $34.13 sits at a lofty 78.3% premium to current levels, which could mean price-target cuts in the near future could provide added turbulence.


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