Airlines soar after bullish upgrades

Myles Udland, Brian Sozzi, and Julie Hyman discuss the factors contributing to Wolfe Research and other analysts upgrading Delta Airlines to outperform this quarter as the travel industry continues to experience a resurgence post-pandemic with COVID restrictions being lifted in areas like the EU.

Video Transcript

MYLES UDLAND: Let's turn our attention back to the airline industry here in the US, airline stocks in focus after analysts over at Wolfe Research upgrading shares of Delta and Alaska.

Brian Sozzi, I know you flagged this one for us, and just an interesting kind of point in time for the airline stocks, specifically, because they've had such a big rally off the lows. And we've talked with a lot of analysts on what's the next catalyst on bringing this industry back towards something like normal? How is the team at Wolfe thinking about this?

BRIAN SOZZI: Yeah, I think the influential Wolfe Research analyst Hunter Kaey really putting it quite well in his upgrades of those airline stocks, saying, quote, while we are skeptical that business travel will return to pre-COVID levels long term, we do see pent up demand scenario playing out later this summer, not unlike what's happening with the leisure space right now.

In terms of upgrades, he's upgrading Delta to outperform from underperform, so essentially what they call on Wall Street a double upgrade. That is a pretty big call. Alaska Air moves to outperform from pure performing. United Airlines go to goes to pure perform from underperform. So again, Hunter Kaey is not the only analyst on the street upgrading airlines and other leisure places ahead of the summer travel season.

But why I do see-- you see United Airlines shares down a little bit here in the early going-- why you do not see that big market moving reaction to the upside today, I would say, guys, you have oil prices. Oil prices are still remaining at high levels. That could be a headwind to a lot of airlines, despite the top line or the sales starting to come back for them.

MYLES UDLAND: Yeah, I think, again, we'll kind of see how things shake out there for the airline business. But, again, those stocks had gotten a boost in premarket trading, but lower with the broader market as we get into today's trading session.