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On Thursday, Citi analysts, led by Stephen Trent (NSE:TREN), revised their price target on Delta Air Lines (NYSE:DAL) shares, lowering it from $72.00 to $62.00, while reaffirming a Buy rating on the stock. The adjustment reflects a more conservative revenue forecast and updated earnings projections, despite the airline's strong cost management. According to InvestingPro data, Delta currently trades at an attractive P/E ratio of 6.38x, suggesting potential value despite recent price weakness. The stock has shown resilience with a 14.36% gain over the past week.
The revision in Delta's price target comes as Citi incorporates a lower expected Revenue per Available Seat Mile (RASM) for the year 2025 into their financial model. This change in forecast is balanced by Citi's confidence in Delta's ability to maintain stringent cost discipline. InvestingPro analysis indicates Delta maintains a GREAT financial health score, with particularly strong marks in relative value and profit metrics. For deeper insights into Delta's valuation and financial health, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Citi's revised earnings per share (EPS) estimates for Delta Air Lines show a decrease from the previous projections. The firm now expects Delta's EPS to be $5.92 for the current year, $7.50 for the following year, and $8.42 for the year 2027. These figures are down from the earlier estimates of $6.83, $7.97, and $8.90 for the same periods, respectively. InvestingPro data reveals that 15 analysts have recently revised their earnings estimates downward, though the company remains profitable with a trailing twelve-month EPS of $5.33.
The new price target of $62.00 is derived by applying a target multiple of 10.5 times to the reduced 2025 earnings per share estimate. This calculation method is consistent with Citi's valuation approach for the airline.
Despite the lowered price target, Citi's stance on Delta Air Lines remains positive, as indicated by the maintained Buy rating. This suggests that the analysts still see potential for the stock to perform well, even with the adjusted financial expectations.
In other recent news, Delta Air Lines reported its Q1 2025 earnings, surpassing analysts' expectations with an earnings per share (EPS) of $0.46, compared to the forecasted $0.44. The company achieved a record revenue of $14 billion, exceeding the anticipated $13.11 billion. Delta also announced a 10-year maintenance agreement with UPS, marking a significant development in its operations. Moody's upgraded Delta's credit rating, highlighting the company's strong financial position. Additionally, Delta is planning to keep net aircraft additions below 1% this year, focusing on cost management and margin protection. The company projects Q2 2025 revenue to fluctuate between a 2% decrease and a 2% increase, with an operating margin guidance of 11-14% for June. Analysts from Melius Research and Bank of America have been closely monitoring Delta's strategies, particularly its capacity reduction plans. These developments reflect Delta's ongoing efforts to maintain a competitive edge in the airline industry amidst economic uncertainties.
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