Analyst Note| Burkett Huey, CFA |
No-moat-rated Delta reported decent third-quarter earnings as the Delta variant surge in COVID-19 cases limited the business travel recovery, but the effects of the new variant were not as bad as consensus feared. Revenue of $9.2 billion beat FactSet consensus by 9.3% and EPS of $0.30 beat FactSet consensus by 96.6%. The two major stories were strengthening business travel demand due to office reopenings and cost inflation, particularly for labor and fuel. We are increasing our fair value estimate to $54.50 from $52.50 as we continue to believe the firm has structurally improved its non-fuel cost base and we expect softening oil prices in the long term.