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In its most recent quarterly earnings call, Delta Air Lines (NYSE: DAL) management expressed optimism for this coming summer travel season. Management is even speculating that Delta will set new records.

One analyst tracking Delta stock believes this optimism is entirely justified thanks to the carrier’s organizational structure and its approach to the market. His current view of the shares is that they stand to appreciate by nearly 37% in price over the next 12 months from current levels. Might that be too bullish an outlook?

The highest flyer of them all, says pundit

In mid-May, international bank HSBC initiated coverage of Delta stock. Its analyst Achal Kumar flagged the stock as a buy, with a price target of $72.80 per share.

Kumar expressed admiration for numerous facets of the carrier’s operations, to the point where the stock is HSBC’s preferred title in the U.S. airline sector.

“We like its strong network mix and competitive positioning at all of its key hubs, which offers a rich mix of traffic, evident from management commentary, but also from the rising revenue from premium cabins,” the analyst wrote in the note heralding the launch of coverage.

It isn’t easy to earn a decent profit as an airline, but Kumar feels that Delta management has found a way. He pointed to its focus on premium offerings, which should help boost margins. It also enjoys good relationships with employees — quite the advantage in an industry often beset by labor discontent.

A fine time for the industry

For me, the U.S. airline incumbents are all worthy of buy consideration as stocks. Demand for travel continues to be robust, as people in the U.S. haven’t entirely gotten over the lockdowns and shut-ins of the pandemic era. Also, a solid economy (thriving in some respects) provides folks with enough disposable income to fund trips.

That, plus Kumar’s accurate evaluation of the state of Delta, makes me agree with him that the stock is a buy at its present level.

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HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Delta Air Lines and HSBC Holdings. The Motley Fool has a disclosure policy.

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