Wolfe Research upgrades three airlines on 'pent-up demand scenario'

Wolfe Research analyst Hunter Keay double upgraded Delta Air Lines (DAL) to Outperform from Underperform with a price target of $55, upgraded Alaska Air (ALK) to Outperform from Peer Perform with a price target of $78, and upgraded United Airlines (UAL) to Peer Perform from Underperform with a price target of $51. While "skeptical" that business travel will return to pre-Covid levels long term, the analyst sees a "pent-up demand scenario later this summer, not unlike what's happening with leisure now." Many business travelers "will feel a competitive urge to get back out there," Keay tells investors in a research note. The analyst says Q4 revenue for airlines "will be weaker than most expect" but that history suggests the market will overlook that as the "overall tempo of the recovery stays positive."