Imperial Capital Still Likes Delta After Its Latest Major Announcement

Imperial Capital analyst Bob McAdoo weighed in on Delta Air Lines, Inc. DAL on May 13 after the company announced it will return more than $6 billion to investors by the end of 2017 through share buybacks and dividends.

The airline said it would increase its quarterly dividend by 50 percent in addition to a new $5 billion share repurchase program that is forecast to be complete by the end of 2017. Delta Airlines also announced that it is currently scheduled to conclude its current $2 billion share repurchase program by the end of June.

Daniel Carp, chairman of Delta’s Board of Directors stated, “Today’s announcement marks the next phase of Delta’s long-term capital deployment strategy as we near conclusion of our balance sheet transformation and place even greater emphasis on returning our free cash flow to shareholders… The expansion of our shareholder return program reflects the Board’s confidence in Delta’s ability to sustain and improve upon its strong financial performance.”

Bob McAdoo maintained a Buy rating on Delta Airlines with a price target of $69 even though some investors were way about “Delta’s near-term PRASM weakness.” The analyst believes “This announcement suggests management remains confident in the industry’s ability to keep capacity growth at rational levels as well as Delta’s ability to remain at the forefront in terms of generating consistent operating margin.”

McAdoo has rated Delta Airlines 14 times since May 2013, earning a 93 percent success rate recommending the company and a +38.3 percent average return per recommendation.

On average, the top analyst consensus for Delta Airlines on TipRanks is Moderate Buy.

Bob McAdoo is no stranger to covering airline stocks such as JetBlue Airways JBLU and Alaska Air ALK. The analyst has rated JetBlue 6 times since June 2011, earning an 83 percent success rate recommending the company and a +25.2 percent average return per recommendation. Likewise, McAdoo has rated Alaska Air 12 times since October 2013 with an 83 percent success rate recommending the stock and a +29.7 percent average return per recommendation.

Overall, the analyst has a 69 percent success rate recommending stocks and a +26.6 percent average return per recommendation.