10 Best Airline Stocks To Buy According To Wall Street Analysts

Published on October 18, 2023 at 3:06 am by Fatima Farooq in Hedge Funds, News

In this article, we will be taking a look at the 10 best airline stocks to buy according to Wall Street analysts. To skip our detailed analysis of the airline industry, you can go directly to see the 5 Best Airline Stocks To Buy According To Wall Street Analysts.

Geopolitical Tensions On The Rise

Airline stocks have had a rough couple of years primarily because of the pandemic and its aftermath. For some, 2023 seemed to be the year airline stocks returned to full strength, but current geopolitical tensions and other issues have been creating a significant dent in the progress of some of the best airline stocks this year. The primary issue of concern these days is the ongoing Israel-Palestine crisis, with attacks from both sides creating panic among travelers and travel providers in the region alike.

Major American airline services providers, including United Airlines Holdings, Inc. (NYSE:UAL), American Airlines Group Inc. (NASDAQ:AAL), and Delta Air Lines, Inc. (NYSE:DAL) have scrubbed service to Israel. Delta Air Lines, Inc. (NYSE:DAL) has issued a notification stating that all flights to Tel Aviv through October 31 will be canceled, and bookings for flights between Israel and the US will also be suspended. However, the company is providing waivers and refunds for customers who have already booked their flights. Companies like these are currently considering the security environment and making adjustments in their flight schedules to ensure the safety of their passengers and staff. The financial impact of these necessary measures is still unclear, but it is something investors in top airline stocks should keep an eye on as the situation develops further.

At the same time, current issues surfacing in the US are also impacting airline stocks. Strikes led by Hollywood talent and autoworkers in the US are significantly impacting the demand for business travel in the country, and major airline companies are beginning to feel the lag caused by these developments. According to a CNBC article published on October 12, Delta Air Lines, Inc. (NYSE:DAL), in particular, is exposed to the ramifications of these strikes because of its high exposure to the automotive and entertainment industries since it has over 70% of the market share at the Detroit Metropolitan Wayne County Airport and about 20% of the market share at the Los Angeles International Airport. The company’s President, Glen Hauenstein, noted in an earnings call on October 12 that the entertainment and automotive sectors impact Delta Air Lines, Inc. (NYSE:DAL) the most in terms of business travel, making these strikes a serious issue for the company.

Airline Stocks Continue to Persevere

Despite the above developments, we do see some of the biggest airline companies, like Delta Air Lines, Inc. (NYSE:DAL), pulling through in the second half of 2023. On October 12, Ed Bastian, the CEO at Delta Air Lines, Inc. (NYSE:DAL), joined CNBC’s “Earnings Alert” to discuss the company’s increase in profit during the third quarter, spearheaded by strong travel demand in the summer. He also noted some factors of concern for the company and its investors. Here are some of his comments:

“We had a strong quarter, a really great quarter, and I’m pleased with the progress that our team is making over the course of these last few months. It’s been a hard quarter. The volatility that you see in the environment, fuel prices up, the demand has been really strong. Another record-breaking set of revenues for the third quarter, which drove a 35% increase in profits, so I don’t think that was disappointing.”

Bastian noted that the rising fuel prices have, however, made it necessary for the company to narrow the company’s guidance to the lower end of the range it had set earlier in July. The July earnings guidance forecasted adjusted full-year earnings of $6 to $7, yet in the October report, the guidance was lowered to $6 to $6.25 per share. Despite this, Bastian noted that airline companies have to play a “long game,” which may indicate to investors that the company still expects to perform well while playing it safe. All in all, though, airline stocks have been holding on in the volatile market environment, which may signal to investors that now may be a good time to enter this area. We have thus compiled a list of some of the best airline stocks to buy in 2023, according to Wall Street analysts. We have also included some of the top undervalued airline stocks in our list.

Best Airline Stocks To Buy According To Wall Street Analysts

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Our Methodology

We selected airline stocks that have positive ratings from Wall Street analysts and have upside potential as of October 15, according to data from TipRanks. The stocks are ranked based on their upside potential, from the lowest to the highest. We also mentioned hedge fund information for each stock by using Insider Monkey’s hedge fund data for the second quarter.

Best Airline Stocks To Buy According To Wall Street Analysts

10. American Airlines Group Inc. (NASDAQ:AAL)

Number of Hedge Fund Holders: 35

Average Analyst Price Target as of October 15: $16.17

Upside Potential as of October 15: 37.97%

American Airlines Group Inc. (NASDAQ:AAL) is a network air carrier company based in Fort Worth, Texas, and is considered to be one of the best airline stocks on the market today. The company provides scheduled air transportation services for passengers and cargo. It has hubs in Charlotte, Chicago, Dallas, Los Angeles, New York, Philadelphia, Phoenix, and Washington D.C.

David Vernon, an analyst at Bernstein, holds an Outperform rating on shares of American Airlines Group Inc. (NASDAQ:AAL) as of September 26. The analyst also placed a price target of $23 on the stock.

There were 35 hedge funds long American Airlines Group Inc. (NASDAQ:AAL) in the second quarter, with a total stake value of $982.4 million.

Holding 15.2 million shares in the company, Citadel Investment Group was the most prominent shareholder in American Airlines Group Inc. (NASDAQ:AAL) at the end of the second quarter.

9. Allegiant Travel Company (NASDAQ:ALGT)

Number of Hedge Fund Holders: 22

Average Analyst Price Target as of October 15: $100.50

Upside Potential as of October 15: 38.13%

Seaport Global analyst Daniel McKenzie holds a Buy rating on shares of Allegiant Travel Company (NASDAQ:ALGT) as of September 29. The analyst also placed a price target of $110 on the stock.

Allegiant Travel Company (NASDAQ:ALGT) is a leisure travel company that provides travel services and products to residents of under-served cities in the US. The company is based in Las Vegas, Nevada, and offers scheduled air transportation on limited-frequency, nonstop flights.

A total of 22 hedge funds held stakes in Allegiant Travel Company (NASDAQ:ALGT) in the second quarter. Their total stake value in the company was $129.5 million.

Diamond Hill Capital mentioned Allegiant Travel Company (NASDAQ:ALGT) in its second-quarter 2023 investor letter:

“Other top contributors included Allegiant Travel Company (NASDAQ:ALGT), Bank OZK and Mr. Cooper Group. Leisure-focused low-cost airline Allegiant Travel has a unique business model, contributing to being among the highest margins versus competitors. As travel demand has normalized against a post-pandemic backdrop, Allegiant has benefited from strong pricing.”

Like United Airlines Holdings, Inc. (NYSE:UAL), American Airlines Group Inc. (NASDAQ:AAL), and Delta Air Lines, Inc. (NYSE:DAL), Allegiant Travel Company (NASDAQ:ALGT) is one of the best airline stocks to invest in today for both institutional investors and individual investors alike.

8. Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY)

Number of Hedge Fund Holders: 21

Average Analyst Price Target as of October 15: $20.60

Upside Potential as of October 15: 46.20%

PAR Capital Management was the most prominent shareholder in Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY) at the end of the second quarter, holding 1.5 million shares in the company.

Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY) is an air carrier company that operates scheduled service, charter, and cargo businesses. It is based in Minneapolis, Minnesota, and operates in the US, Latin America, and internationally.

Christopher Stathoulopoulos, an analyst at Susquehanna, holds a Positive rating on shares of Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY) as of October 11. The analyst also placed a price target of $18 on the stock.

Our hedge fund data for the second quarter shows 21 hedge funds long Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY), with a total stake value of $105.6 million.

7. Ryanair Holdings plc (NASDAQ:RYAAY)

Number of Hedge Fund Holders: 21

Average Analyst Price Target as of October 15: $140

Upside Potential as of October 15: 52.91%

Ryanair Holdings plc (NASDAQ:RYAAY) was spotted in the 13F holdings of 21 hedge funds at the end of the second quarter. Their total stake value in the company was $421.2 million.

Based in Swords, Ireland, Ryanair Holdings plc (NASDAQ:RYAAY) is a provider of scheduled-passenger airline services. The company operates in Ireland, the United Kingdom, Italy, Spain, and internationally. It also provides ancillary services such as non-flight schedules and Internet-related services, among more.

Like United Airlines Holdings, Inc. (NYSE:UAL), American Airlines Group Inc. (NASDAQ:AAL), and Delta Air Lines, Inc. (NYSE:DAL), Ryanair Holdings plc (NASDAQ:RYAAY) is one of the best airline stocks to buy according to Wall Street analysts today.

6. Delta Air Lines, Inc. (NYSE:DAL)

Number of Hedge Fund Holders: 56

Average Analyst Price Target as of October 15: $55.23

Upside Potential as of October 15: 61.96%

Delta Air Lines, Inc. (NYSE:DAL) is a provider of scheduled air transportation for passengers and cargo in the US and internationally. The company operates through its Airline and Refinery segments. It is based in Atlanta, Georgia, and is also one of the best airline stocks to consider investing in this year.

In total, 56 hedge funds were long Delta Air Lines, Inc. (NYSE:DAL) in the second quarter, with a total stake value of $1.5 billion.

An Overweight rating was maintained on shares of Delta Air Lines, Inc. (NYSE:DAL) on October 13 by Jamie Baker, an analyst at JPMorgan. The analyst also placed a price target of $68 on the stock.

Holding 6.3 million shares in the company, GMT Capital was the largest shareholder in Delta Air Lines, Inc. (NYSE:DAL) at the end of the second quarter.

Here’s what Patient Capital Management said about Delta Air Lines, Inc. (NYSE:DAL) in its second-quarter 2023 investor letter:

“We like other names mostly ignored by the market for similar reasons. Names like Expedia (EXPE), General Motors (GM) and Delta Air Lines, Inc. (NYSE:DAL). These companies have strong returns on capital (14%+), good competitive positions, cheap valuations (all double-digit free cash flow yields), and are returning capital to shareholders. We trust the managements to take advantage of their depressed stock prices and create long-term shareholder value.”

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