Delta Air Lines Inc. (NYSE:DAL) saw its price target increased to $65 from $62 by Bernstein SocGen Group Tuesday, with an Outperform rating sustained. The airline is anticipated to disclose its third-quarter earnings this Thursday before market open, .
According to the analyst, Delta's third-quarter performance is expected to align with prior forecasts, projecting earnings of $1.59 per share, excluding a $0.45 impact from the Crowdstrike outage. The analyst predicts a strong fourth quarter and beyond, leveraging lower industry capacity growth and fare strategies by discount carriers. Delta's September return to positive unit revenue trends is likely to be confirmed, supported by strategic capacity reductions across the industry.
The airline had previously anticipated surpassing the midpoint of its guidance, excluding the outage effect, which could provide a comfortable margin relative to fourth-quarter consensus estimates. Despite consensus figures incorporating lower fuel costs than recent volatility might suggest, fourth-quarter projections are deemed achievable due to the anticipated benefits from reduced discount carrier capacity.
The report also cautions about the potential impact of an active hurricane season, with Delta being the second-largest carrier in major Southwest Florida airports based on available seat miles.
"While this presents some risk to a wider range of potential 4Q outcomes, Delta is well positioned to benefit as money losing capacity is cut from the market," said the analysts.
In other recent news, Delta Air Lines has made significant adjustments to its flight schedule due to escalating tensions in the Middle East. The airline has suspended its flights between New York and Tel Aviv until December 31, joining several other international airlines in altering their services to and within the region. These changes come as part of a broader precautionary response to ensure the safety of passengers and crew.
Furthermore, Delta Air Lines has retained its Buy rating from TD Cowen, which anticipates strong fourth quarter revenue growth and EBIT margin for the airline. The firm's stance comes ahead of Delta's third-quarter earnings report, with key areas of focus including pricing trends, corporate travel, premium demand, and industry capacity. Citi has also maintained its Buy rating on Delta's stock, adjusting earnings per share estimates based on an improved third-quarter revenue outlook and a reduction in non-operating expenses.
InvestingPro Insights
As Delta Air Lines prepares to release its third-quarter earnings, InvestingPro data provides additional context to the analyst's optimistic outlook. The company's P/E ratio of 7.02 and P/E ratio (Adjusted) of 7.76 for the last twelve months as of Q2 2024 suggest that Delta is trading at a relatively low earnings multiple, which aligns with one of the InvestingPro Tips highlighting the company's attractive valuation.
Delta's revenue growth of 7.84% over the last twelve months and 6.93% in Q2 2024 indicates steady expansion, supporting the analyst's expectations for strong performance. The company's operating income margin of 9.95% for the last twelve months demonstrates its ability to maintain profitability amid industry challenges.
InvestingPro Tips also point out that Delta is trading at a low P/E ratio relative to near-term earnings growth, which could be particularly relevant given the analyst's positive outlook for the fourth quarter and beyond. Additionally, the tip noting that analysts predict the company will be profitable this year aligns with the expectations for the upcoming earnings report.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for Delta Air Lines, providing a deeper understanding of the company's financial position and market performance.
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