On Wednesday, Susquehanna maintained a Positive rating on Delta Air Lines (NYSE: NYSE:DAL) shares and increased the price target to $59 from $50, signaling confidence in the airline's future performance. The firm revised its financial forecasts for Delta, adjusting the third-quarter adjusted earnings per share (EPS) estimate down by approximately 20% to $1.50, which is slightly below the previously implied guidance. This revision reflects operational pressures linked to CrowdStrike (NASDAQ:CRWD) in the third quarter.
The fourth-quarter adjusted EPS estimate has been raised by about 7% to $1.45, based on a slightly improved operating margin. Looking further ahead, Susquehanna has increased the full-year 2025 adjusted EPS estimate by roughly 6% to $7.00, again due to a slightly better operating margin and what the firm sees as a stronger performance below the line.
Susquehanna's core assumptions for Delta's future include available seat miles (ASMs) growing by 4%, cost per available seat mile excluding fuel (CASM-ex) increasing by 3%, and total revenue per available seat mile (TRASM) improving by 1.3%. These projections are in contrast to the consensus estimates, which anticipate ASMs to rise by 3.6%, CASM-ex to go up by 1.1%, and TRASM to increase by 2.2%.
The firm's positive outlook is supported by a constructive view on the industry's revenue per available seat mile (RASM) and perceived structural advantages for Delta Air Lines. Consequently, the target EBITDAR (earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs) multiple has been raised by half a point to 5.5 times. After accounting for the changes to the profit and loss statement, cash flow, and target multiple, the new price target has been set at $59.
In other recent news, Delta Air Lines is set to disclose its third-quarter earnings, with analysts projecting earnings of $1.59 per share. Bernstein SocGen Group has raised Delta Air Lines' price target from $62 to $65, maintaining an Outperform rating. The firm anticipates a strong fourth quarter for the airline, citing lower industry capacity growth and fare strategies by discount carriers.
Delta Air Lines has also adjusted its flight schedule in response to escalating tensions in the Middle East, suspending its flights between New York and Tel Aviv until December 31. TD Cowen and Citi have both retained their Buy ratings on Delta Air Lines, with TD Cowen anticipating strong fourth-quarter revenue growth and EBIT margin, and Citi adjusting earnings per share estimates based on an improved third-quarter revenue outlook and a reduction in non-operating expenses. Please note, these are recent developments and are subject to change.
InvestingPro Insights
Delta Air Lines' financial metrics and market performance align well with Susquehanna's positive outlook. According to InvestingPro data, Delta's P/E ratio stands at 7.22, indicating that the stock is trading at a relatively low earnings multiple. This supports the InvestingPro Tip that Delta is "Trading at a low P/E ratio relative to near-term earnings growth."
The company's revenue growth of 7.84% over the last twelve months and a strong operating income margin of 9.95% suggest that Delta is maintaining its profitability despite industry challenges. This performance is reflected in the stock's impressive 45% total return over the past year.
InvestingPro Tips also highlight that Delta is a "Prominent player in the Passenger Airlines industry" and has been "Profitable over the last twelve months," which aligns with Susquehanna's constructive view on the company's structural advantages.
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 health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.