Delta Air Lines named top pick at Morgan Stanley

Morgan Stanley has named Delta Air Lines (DAL) a top pick, reiterating its Overweight rating and increasing its price target from $77 to $85. The analyst behind the call claims that investors will reward the airline's push into premium.

Yahoo Finance Anchors Brad Smith and Jared Blikre break down the latest developments for Delta and the airline sector as a whole.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

Editor's note: This article was written by Nicholas Jacobino

Video transcript

JARED BLIKRE: We want to take a look at another trending ticker. This is Delta Airlines. They're getting named a top pick at Morgan Stanley reiterating their overweight rating and raising their price target to $85 from $77. The analyst behind the call saying Delta's push into premium will be rewarded by investors. And just taking a look at the Wi-Fi Interactive one more time here, I am showing here. Let's do the year-to-date first so we can see, yeah, we did get some lift off.

We talk about the broadening of the rally. Well, we got that in March here. But if you take a look at the five-year chart, you can see, really, pretty much at the upper end of a potential rain. This was the pandemic drop, by the way. And it is touched this number once, twice. Is three times a charm? We'll have to see. But if not, probably heads back down to $30.

BRAD SMITH: Yeah. And Morgan Stanley is not new to this-- or they're new to this call specifically and this pivot on Delta, but they're not the first to make a top pick analysis like this. TD Cowen, Elaine Becker, one of the first out really looking to 2024. And overall, for TD Cowen naming that the top airline pick there. But I think more notably here for Morgan Stanley in assessing the attribution to premium here.

Delta already being known as a premium brand and really how it's able to, in the wake of so many of the aircraft manufacturing woes that are taking place and impacting the entire industry capacity, the routes, the ability to take on aircraft that have already been ordered as well that's going to impact for years to come some of the flight routes and schedules here, Delta perhaps best insulated from some of the Boeing issues as they don't operate the Max currently.

However, they did also have to come out to the street and say, all right, well we're pushing back that delivery timeline and that target for when we're expected to take delivery of the Max 10 and thus it be inserted into the fleet and for the number of pilots that were already training on how to fly that aircraft as well here.

JARED BLIKRE: Yeah. And I just add, talking about premium brands, Morgan Stanley draws an interesting comparison to Abercrombie and Fitch in the note. So I think we've got to jump off here. I don't want to leave too many cliffhangers, but interesting note there to read.