By 
Delta Air Lines Inc. reported fourth-quarter results that beat analysts’ top- and bottom-line estimates early Friday, although the carrier’s stock fell on weaker-than-expected first-quarter guidance.
But Cowen analyst Helane Becker says that Delta’s
DAL,
-4.90%
fourth-quarter numbers are particularly noteworthy after a tough year for the airline industry. Carriers have been wrestling with the impact of fuel prices, hiring challenges and a bumpy recovery from pandemic-era travel disruption.
“Delta had an impressive [fourth-quarter] performance to close out a tumultuous year,” Becker wrote in a note released Friday. “Delta reported [fourth-quarter 2022] adjusted revenue, adjusted EBIT [earnings before interest and taxes] and [adjusted earnings per share] above both our and consensus estimates despite the challenges over the holiday period.”
In a statement released Friday, Delta said that consumer demand remains robust. Strong demand in the fourth quarter drove domestic total passenger revenue 7% higher compared with the same quarter in 2019, before the pandemic hit, the company said. International passenger revenue was up 5% in the fourth quarter, compared with the fourth quarter of 2019.
Set against this backdrop, first-quarter weakness could present an opportunity, says Becker. “Guidance for [the first quarter] came in below our expectations as management is now incorporating the impact of higher labor expenses in their outlook,” she said in the note. “[The first quarter] is seasonally the weakest quarter of the year, and we would use any weakness as a buying opportunity.”
Cowen has a $54 price target for Delta and rates the stock outperform.
Related: Airline stocks fall premarket after Delta’s weaker-than-expected guidance
Delta’s stock has fallen 4.5% in the last 12 months, compared with the S&P 500’s
SPX,
-0.20%
decline of 14.5%. The U.S. Global Jets ETF
JETS,
-0.70%
is down 10.7% over the same period.
Of 21 analysts surveyed by FactSet, 19 have an overweight or buy rating for Delta and two have a hold rating.
Airline stocks fell before market open Friday. Delta’s stock is down 5.5%, while American Airlines Group Inc.
AAL,
-0.95%
is down 4% and United Airlines Holding Inc.
UAL,
-0.58%
is down 3.4%. Southwest Airlines Co.’s
LUV,
-0.60%
stock is down 2.3%, JetBlue Airways Corp.
JBLU,
-0.25%
is down 3.6% and Alaska Air Group Inc.
ALK,
+0.06%
is down 1.7%. Spirit Airlines Inc.’s
SAVE,
+0.58%
stock is down 2.4%. The U.S. Global Jets ETF
JETS,
-0.70%
is down 2.4%.
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