Delta’s dismal post-earnings history could slow down the stock’s outperformance in 2024
Delta Air Lines, Inc. (NYSE:DAL) will land in the earnings confessional on Wednesday, April 10, to report fiscal first-quarter results. The equity picked up a bull note ahead of the event, with Raymond James today raising its price objective to $58 form $55. The shares are up 2.6% to trade at $47.25 at last check, and now boast a 40.4% year-over-year lead. BA hit its highest level since September last week, with support from the 20-day moving average.
There’s nothing but love for Delta Air Lines among the brokerage bunch, with all 17 of the analysts in coverage sporting a “strong buy” rating. Plus, the 12-month consensus target price of $56.75 is already a whopping 20.1% premium to the security’s current levels.
Delta Air Lines stock has a dismal post-earnings record, however. The shares finished six of the past eight post-earnings reports lower, including a 9% tumble in January. DAL averaged a move of 3.9% in the past two years, regardless of direction, but the options pits are pricing in a much bigger-than-usual swing of 7.9% this time. Factor in the stock’s average April loss of 0.7% in the last 10 years, and there’s turbulence ahead for investors.
The options pits seem to have caught onto that fact, per the security’s 10-day put/call volume ratio of 1.81 over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks higher than 98% of readings from the last year. This means puts have been much more popular than usual in the past two weeks.
It’s also worth noting the equity’s Schaeffer’s Volatility Scorecard (SVS) sits at a high 98 out of 100. This means BA exceeded option traders’ volatility expectations in the past 12 months.