Airline stocks took a hit on Tuesday as concerns over decreasing travel demand began to mount. This downturn is largely attributed to a decline in consumer confidence and spending, impacting major players in the aviation sector.
Jefferies downgraded several key airlines, including Delta Air Lines (NYSE: NYSE:DAL), American Airlines (NYSE: NASDAQ:AAL), Southwest Airlines (NYSE: NYSE:LUV), and Air Canada (TSX:AC). This move reflects potential cuts in forecasts for 2025. Delta, in particular, faced a significant downgrade, resulting in a substantial drop in its stock price. Despite these challenges, Delta continues to see growth in specific areas such as high-end services and credit card partnerships.
The NYSE Arca Airline Index also reported a considerable drop in the first quarter, outpacing the decline of the broader S&P 500 index (SPX). A report from Bank of America (NYSE:BAC) further highlighted a 7.2% decrease in airline spending, attributing it to reduced consumer confidence, adverse weather, and the timing of Easter.
Jefferies Downgrades Major Airline Stocks Amid Consumer Spending Woes
Jefferies’ decision to downgrade several airlines has sent ripples through the market. Delta Air Lines saw its stock price decline by approximately 5% following the downgrade and a significant reduction in its price target, now set at $46. This adjustment reflects concerns over future earnings and consumer travel trends.
United Airlines Holdings Inc (NASDAQ:UAL), however, remains Jefferies’ sole “buy” recommendation among U.S. carriers, indicating a more favorable outlook for the airline. The impact of these downgrades was felt across the board, with the NYSE Arca Airline Index experiencing its largest percentage drop since the third quarter of 2023.
Delta Air Lines Stock Performance
Delta Air Lines experienced notable fluctuations in its stock price amid the recent downgrades. The stock opened at $42.33 and was trading at $41.94 as of April 1, 2025, at 11:03 EDT. The day’s low and high were recorded at $40.855 and $42.396, respectively.
Over the past year, Delta’s stock has seen a wide range, with a 52-week low of $37.29 and a high of $69.98. Despite the recent downturn, analysts maintain a strong buy recommendation for Delta, with a target mean price of $74.93. The airline’s financial metrics, including a trailing P/E ratio of 7.87 and a forward P/E ratio of 5.97, suggest potential value for investors in the long term.
United Airlines also faced a decline, with its stock opening at $67.45 and trading at $66.87 by mid-morning on April 1, 2025. The day’s trading range was between $64.69 and $67.45. United’s stock has experienced significant volatility, with a 52-week low of $37.02 and a high of $116.00.
Despite these fluctuations, analysts remain optimistic, with a strong buy recommendation and a target mean price of $122.15. Southwest Airlines, on the other hand, opened at $32.72 and was trading at $32.47. The airline’s stock has been relatively stable, with a 52-week range from $23.58 to $36.12. Analysts have a hold recommendation for Southwest, reflecting a more cautious outlook.
The recent developments in the airline industry highlight broader challenges facing the travel sector. With a reported 7.2% decline in airline spending, factors such as reduced consumer confidence, adverse weather conditions, and the timing of Easter have compounded the industry’s struggles.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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