Matt Barasch Delta Air Lines Inc DAL-N DON'T BUY Feb 19, 2004

Our PAST TOP PICK with DAL is progressing well.  To remain disciplined, we recommend trailing up the stop (from $48) to $54 at this time.

We reiterate DAL as a TOP PICK.  Analysts forecast another 11% growth in international cargo demand and the airline has one of the best diversified networks in the world -- even if the new US Administration imposes tariffs.  We like that cash reserves are growing, while debt is retired.  It trades at 9x earnings and supports a 40% ROE.  We recommend keeping a tight stop at $54, looking to achieve $76 -- upside potential of 20%.  Yield 0.8%  Season's Greetings!

Following better than expected Q4 earnings, we again reiterate DAL as a TOP PICK.  EPS growth was 45% over the year and the partnership with AMEX added another $2 billion to the bottom line.  Management expects 10% earnings growth in 2025 as premium routes allow margins to continue to grow.  We recommend trailing up the stop (from $54) to $60, looking to achieve $83 — upside potential of 19%.  Yield 0.7%

Our PAST TOP PICK with DAL has triggered its stop at $60.  To remain disciplined, we recommend covering the position at this time.  Combined with our previous guidance, this will result in a net investment gain of 27%.