Delta Air Lines downgraded to Neutral from Buy at BofA/Merrill
As noted earlier, BofA/Merrill analyst Andrew Didora downgraded Delta Air Lines (DAL) to Neutral and lowered his price target to $51 from $62 as part of his broader research note on Airlines partially titled "more cautious given demand outlook". The analyst notes that his Flight Indicator data analysis suggests a "deceleration in domestic PRASM" in the first half of the year, coupled with other slowing demand indicators that include "weak ISM survey, declining CEO Confidence, airline pricing growth off highs, currency headwind, and government shutdown". Didora believes that Delta Air Lines specifically lacks the earnings catalysts evident in other airlines, while its valuation of 7.7-times forward earnings is a premium to the 5.8-times at United Airlines (UAL) and 7.1-times at American Airlines (AAL). The analyst adds that he still considers the airline as "best in class", but notes that the near-term headwinds in demand indicators justify a downgrade.