Morgan Stanley defended Delta Air Lines (NYSE:DAL) on Tuesday after the airline firm’s Q1 steering replace rattled traders.

Taking the broader view, analyst Ravi Shanker mentioned the agency likes what it has seen from Delta (DAL) so far coming into 2023 from the December Analyst Day via to the This fall print and up to date Q1 information.

“With the December storm and pilot contract now behind them (assuming profitable ratification), the coast is clear for DAL to execute and do what it does finest… fly a number one airline franchise on the technique to incomes $7 EPS.”

Delta (DAL) is the legacy airline seen being in the pole place in a Goldilocks yr with it having the strongest tailwind from a rebound in company and worldwide journey. DAL is additionally mentioned to have the potential for the most working leverage as capability incrementally returns. As for the Q1 information, Shanker mentioned the softer begin to the yr is the results of idiosyncratic quirks on the timing of prices and the market is more likely to look previous it and give attention to accelerating earnings momentum via 2023.

Morgan Stanley has an Overweight score on DAL and has it slotted as a top sector choose. The agency’s worth goal of $65 reps greater than 70% upside for the airline stock.

Shares of Delta Air Lines (DAL) fell 1.10% on Tuesday morning, however are still up greater than 15% in 2023.

Sector watch: U.S. airline demand appears sturdy in early reads for 2023.