Delta Air Lines Faces Challenges Despite Positive Q1 Earnings Report
Delta Air Lines, Inc. (DAL) holds a market capitalization of $28.9 billion and stands as a significant player in the U.S. airline industry, providing scheduled air transport for both passengers and cargo, domestically and internationally. The company operates mainly through two segments: Airline and Refinery. The airline segment accounts for the bulk of revenues, while the refinery division enhances operations with jet fuel production and third-party agreements.
Over the past year, Delta Air Lines has struggled compared to the wider market. The stock has dropped 11.1% in the last 52 weeks, contrasting with the S&P 500 Index ($SPX), which has seen a 10.2% increase. On a year-to-date basis, Delta shares are down 24.2%, while the SPX experienced a slight decline of nearly 4%.
When examining performance more closely, Delta has notably underperformed against the Industrial Select Sector SPDR Fund (XLI), which has delivered a 9.7% return over the same period.
Notably, on April 9, Delta Air Lines shares surged 23.4% after the company reported an adjusted EPS of $0.46 for Q1 2025, which exceeded consensus estimates and represented a 2.2% increase year-over-year. Additionally, revenue reached $14 billion, driven by a 17% rise in cargo revenues to $208 million and a 3% year-over-year increase in passenger revenues to $11.5 billion. The company’s adjusted operating cash flow was reported at $2.4 billion, with a reduced capacity growth plan for the second half of 2025 aimed at safeguarding margins.
Looking ahead, analysts forecast a projected decline of 17.1% year-over-year in DAL’s EPS for the fiscal year ending December 2025, estimating it will drop to $5.11. Delta’s earnings surprise history shows a mix of outcomes, with the company exceeding consensus estimates in two of the last four quarters while falling short in the others.
Currently, among the 21 analysts covering the stock, the consensus rating stands at “Strong Buy,” supported by 18 “Strong Buy” ratings and three “Holds.” This outlook is less optimistic than three months prior, when there were 21 “Strong Buy” ratings.
On the same day, Morgan Stanley adjusted its price target for Delta Air Lines to $88, maintaining an “Overweight” rating. Currently, DAL trades below the average price target of $59.05, with the highest target of $88 indicating a potential upside of 92.9% from existing price levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. For further details, please view the Barchart Disclosure Policy here.
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