On Friday, Evercore ISI updated its price target for Delta Air Lines (NYSE:DAL), increasing it to $80 from the previous $65 while maintaining an Outperform rating on the stock.
The firm anticipates Delta Air Lines to emphasize the durability of its results at its upcoming Investor Day on November 20 in New York. The airline has demonstrated a strong profitability recovery even when the US industry faced challenges, and it is expected to benefit further as conditions improve.
The focus during the Investor Day is expected to be on various financial metrics and commitments, including margins, earnings growth, free cash flow, and leverage. Evercore ISI suggests that Delta Air Lines has a more favorable cost structure than its industry peers heading into 2025. The airline's commitment to balance sheet improvement and risk reduction continues to be a priority.
Analysts at Evercore ISI believe that Delta's higher free cash flow conversion compared to its peers will likely be a highlight in the period from 2025 to 2027. The firm also noted that the trends observed in the fourth quarter, including headwinds from the November election impact, have unfolded as expected. This suggests that the airline's performance is on track with the firm's projections.
In other recent news, Delta Air Lines has been the center of significant developments. Goldman Sachs (NYSE:GS) recently resumed coverage with a positive outlook, upgrading Delta's stock to a Buy rating based on expected industry-leading margins in 2024. The airline's segmentation strategy, growth in loyalty revenue, and strong performance in premium demand were among the factors supporting this rating.
TD (TSX:TD) Cowen and Jefferies also maintained a Buy rating for Delta, highlighting potential revenue opportunities and a robust earnings outlook.
Delta's recent financial reports showed $1.3 billion in pretax income for Q3 2024, with an expected 30% year-over-year earnings growth in Q4 2024. The company anticipates a 2-4% total revenue increase for Q4 2024 and a 2-point operating margin expansion in 2025. Delta also plans to repay $4 billion in debt this year.
In other company news, Delta is currently engaged in a legal dispute with cybersecurity firm CrowdStrike (NASDAQ:CRWD) over a global outage in July, which Delta alleges led to significant operational disruptions and financial losses exceeding $500 million.
Additionally, due to safety concerns in Israel, Delta has suspended its flights between New York and Tel Aviv through March, issuing a travel waiver for affected passengers. These are the recent developments for Delta Air Lines.
InvestingPro Insights
Delta Air Lines' strong performance, as highlighted in the article, is further supported by recent data from InvestingPro. The company's P/E ratio of 8.96 and adjusted P/E ratio of 9.29 for the last twelve months as of Q3 2024 indicate that the stock is trading at a relatively low earnings multiple. This aligns with one of the InvestingPro Tips, which suggests that Delta is "Trading at a low P/E ratio relative to near-term earnings growth."
The company's revenue growth of 5.32% over the last twelve months and EBITDA growth of 11.46% demonstrate Delta's ability to expand its business and improve profitability. This performance is reflected in the stock's impressive returns, with a 22.99% price total return over the past month and a substantial 83.3% return over the last year.
InvestingPro Tips also indicate that Delta is trading near its 52-week high, which corroborates Evercore ISI's bullish outlook and increased price target. The stock's current price is 97.89% of its 52-week high, suggesting strong momentum.
For investors seeking more comprehensive insights, InvestingPro offers 12 additional tips for Delta Air Lines, providing a deeper understanding of the company's financial health and market position.
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