Wall Street Bulls Look Optimistic About Delta (DAL): Should You Buy?

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Delta Air Lines (DAL), and emphasizes the importance of using these recommendations in conjunction with other analytical tools like the Zacks Rank for making informed investment decisions [1][4]. Brokerage Recommendations - Delta Air Lines currently has an average brokerage recommendation (ABR) of 1.00, indicating a Strong Buy, based on recommendations from 21 brokerage firms, all of which are Strong Buy [2]. - Despite the Strong Buy recommendation, the article cautions against making investment decisions solely based on this information, as studies show limited success of brokerage recommendations in predicting stock price increases [4][9]. Analyst Bias - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, with five "Strong Buy" recommendations for every "Strong Sell" recommendation, which may mislead retail investors [5][9]. - The interests of brokerage firms may not align with those of retail investors, leading to a lack of insight into future stock price movements [6]. Zacks Rank Comparison - The Zacks Rank, a proprietary stock rating tool, categorizes stocks from Strong Buy to Strong Sell and is based on earnings estimate revisions, which are strongly correlated with near-term stock price movements [7][10]. - The Zacks Rank is distinct from the ABR, as it is a quantitative model that reflects timely earnings estimate revisions, while the ABR may not always be up-to-date [8][11]. Current Earnings Estimates - The Zacks Consensus Estimate for Delta's earnings for the current year remains unchanged at $6.07, indicating steady analyst views on the company's earnings prospects [12]. - The unchanged consensus estimate has resulted in a Zacks Rank of 3 (Hold) for Delta, suggesting caution despite the Buy-equivalent ABR [13].