Wang & Lee Group board approves 250-to-1 reverse share split
On Monday, UBS analysts downgraded Delta Air Lines (NYSE:DAL) stock from Buy to Neutral, significantly reducing the price target from $77.00 to $42.00. The revision comes amid concerns about a weakening economic environment and the increased likelihood of a recession. UBS cited Delta’s own mid-March forecast adjustments, which included a 4 percentage point decrease in expected first-quarter revenue growth, as a sign of softening demand in domestic leisure and corporate travel sectors. According to InvestingPro data, Delta’s stock is currently trading at $37.25, nearly 47% below its 52-week high of $69.98, though analysis suggests the stock may be undervalued at current levels.
Delta Air Lines has observed a decline in domestic leisure travel and slower growth in corporate travel, which prompted the company to adjust its first-quarter revenue growth projections. Despite these challenges, the airline maintains strong fundamentals with annual revenue of $61.64 billion and a healthy gross profit margin of 21.86%. UBS analysts believe that these trends, coupled with a weaker economic outlook and potential tariff pressures on international travel, will continue to affect Delta’s total revenue per available seat mile (TRASM) in the second quarter and the second half of 2025. They predict further deterioration in the airline’s international and premium customer segments, as well as ongoing weakness in corporate travel. InvestingPro data reveals that 16 analysts have recently revised their earnings expectations downward for the upcoming period.
Despite Delta Air Lines highlighting its premium services and loyalty programs as potential buffers against economic slowdowns, the UBS report expressed skepticism. The analysts pointed to the impact of rising inflation, driven by tariffs, and the negative wealth effect from recent sharp declines in the stock market as factors that could lead to a decrease in spending on premium travel and a softening of loyalty program revenue. Trading at a P/E ratio of just 6.89, Delta remains attractively valued compared to industry peers. Get access to over 12 additional key insights about Delta Air Lines with InvestingPro, including exclusive Fair Value analysis and comprehensive financial health scores.
The UBS report also notes that approximately 40% of Delta’s passenger revenue comes from its premium services, while loyalty programs account for around 8% of passenger revenue. With these segments at risk due to economic factors, Delta’s financial resilience may be tested in the coming quarters.
The downgrade reflects a cautious stance by UBS analysts on the airline’s near-term financial performance, as Delta faces various headwinds that could challenge its revenue and profitability.
In other recent news, Delta Air Lines has adjusted its financial outlook, reducing its revenue growth forecast for the first quarter of 2025 from an expected 7% to 9% down to 3% to 4%. This revision is partly due to increased fuel costs and a weaker economic environment affecting travel demand. Additionally, Delta has updated its earnings per share guidance to a range of $0.30 to $0.50, falling short of the previous projection of $0.70 to $1.00. UBS has responded to these developments by lowering Delta’s stock price target from $90 to $77, while maintaining a Buy rating. Evercore ISI also revised its price target for Delta from $80 to $70, citing policy uncertainty and recent tariff announcements impacting corporate travel. A recent report from the Transportation Safety Board highlighted a Delta regional jet incident in February, where a rapid descent led to the plane flipping upon landing in Toronto, resulting in injuries to several passengers. The broader travel sector is experiencing a downturn, influenced by Delta’s announcement of a significant reduction in its profit guidance and similar moves by other airlines like American Airlines (NASDAQ:AAL). Despite these challenges, Delta reports strong booking numbers for April and May, with robust trends in premium and international travel, hinting at a potential rebound.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.