Stocks in the Buy Spotlights: Delta Airlines (NYSE:DAL) and Ferrari (NYSE:RACE) – Live Trading News
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$DAL $RACE
On both sides of the aisle, there is a perception that the public needs another shot in the arm; support for unemployment benefits, support for small businesses, and more cash injected into the system to drive the economy to complete recovery Fassster.
The kink is partisan politics.
House Democrats put together a $2.2-T proposal, but it was loaded down with the traditional Congressional Pork. President Trump, along with Congressional Republicans, refused to accept it. The Democrats refused to back down. Both sides are now fencing in the runup to the election.
Nevertheless the economy will survive without more aid.
“I don’t think we need stimulus in the next 30 days for the economy to stay afloat. There is no risk of a double dip recession in the next 30 days if we don’t get the stimulus done,” Morgan’s Mike Wilson wrote.
In the longer run, he and we are optimistic that a stimulus package will happen. As it is in the interests of both parties to pass it, and adds, “We still think stimulus is coming. It is now just a timing question before or after the election. Our best guess is probably after the election.”
Morgan Stanley analysts are very keen on 2 stocks that look especially compelling.
According to these analysts, each name is poised to surge at least 40% over the 12 months ahead. We checked to see what other Wall Street’s analysts have to say about them.
Ferrari (NYSE:RACE): The famous performance and luxury Italian car company has performed well this year, recovering quickly from the February China virus-inspired market crash. The recovery in RACE shares underlines the fact that Ferrari’s well-heeled customer base is largely immune to downturns in consumer spending.
Adam Jonas, Morgan Stanley’s resident expert in the automotive sector, sees Ferrari in a solid position overall.
“We believe the 5 new 2020 models plus the 2 to be released in 2021 (1 yet to be announced) mean Ferrari is poised for an extreamly strong 2021 from the point of view of overall: portfolio diversification, mix and higher ASPs, which together with strong economies of scale, can lead investors to expect strong incremental margins. We forecast EBITDA margins to rise from 32% in 2020 to 36% in 2021 (34% in 2019),” Mr. Jonas wrote.
Mr. Jonas rates the stock a Buy, supported by those comments, and his 265 price target suggests a 1yr Northside of 44%.
Ferrari stock has a Buy rating from the analyst consensus, with 11 reviews breaking down to 9 Buys, 1 Hold, and 1 Sell. The shares are selling for 185.76, and their 210.03 average price target suggests they have a 14% upside potential for the yr ahead.
Delta Airlines, Inc. (NYSE:DAL) is 1 of the Key players in the global airlines industry. With its HQ and primary hub in Atlanta, Georgia, Delta boasts a market cap of almost $21-B after accounting for the stock’s net loss of 44% since the end of February.
The airline industry has been hammered by the trade and travel restrictions put in place to combat The China Virus, in addition to the slow demand due to the economic crisis. DAL reported only $1.47-B in revenue for Q-2, down 82% and the EPS loss was deep, at 4.43. The company has been taking steps to maintain liquidity, including issuing senior secured notes for upwards of $1.5-B and drawing on a $3-B credit facility.
Morgan Stanley’s Ravi Shanker focuses on the airline industry, and describes recent conditions as a “long and tough quarter.” However, the analyst the analyst views DAL’s risk/reward as compelling at current marks
“We expect a beat for DAL this quarter, but don’t believe that results (outside of cash burn) are likely to matter… We expect investors to focus on forward commentary more than current results,” Mr. Shanker noted. “DAL has some of the strongest customer satisfaction numbers among the other Legacy peers, while also commanding a higher PRASM, making it our preferred Legacy carrier. With ample liquidity we see limited liquidity risk here.“
In line with his view of Delta as fundamentally sound, Mr. Shanker rates the stock a Buy. He sets a price target of 54, indicating confidence in an impressive upside of 65% for the coming year.
Overall, the analyst consensus view for DAL is a Moderate Buy, based on 11 reviews, including 7 Buys and 4 Holds. The average target of 39.50 suggests a 1-yr Northside of 20% from the current share price of 32.73
Have a healthy day, Keep the Faith!
