Goldman Sachs Sees Delta's Long-Term Growth On Track: EPS To Hit $9.50 By FY26
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Nov 21 2024
0mins
Source: Benzinga
Delta Air Lines Financial Outlook: Analyst Catherine O’Brien from Goldman Sachs highlighted Delta's financial targets, including mid-teens operating margins and significant annual free cash flow, while reaffirming its fourth-quarter guidance and outlining growth expectations for 2025.
Investment Recommendations: O’Brien maintained a Buy rating on Delta, noting the airline's strong balance sheet and premium product strategy, which supports high margins and stable demand; investors can consider exposure through specific ETFs.
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Analyst Views on DAL
Wall Street analysts forecast DAL stock price to rise
18 Analyst Rating
18 Buy
0 Hold
0 Sell
Strong Buy
Current: 69.500
Low
77.00
Averages
83.50
High
90.00
Current: 69.500
Low
77.00
Averages
83.50
High
90.00
About DAL
Delta Air Lines, Inc. provides scheduled air transportation for passengers and cargo throughout the United States and around the world. The Company has hubs and markets in Amsterdam, Atlanta, Bogota, Boston, Detroit, Lima, London-Heathrow, Los Angeles, Mexico City, Minneapolis-St. Paul, New York-JFK and LaGuardia, Paris-Charles de Gaulle, Salt Lake City, Santiago (Chile), Sao Paulo, Seattle, Seoul-Incheon, and Tokyo. Its segments include Airline and Refinery. Its airline segment is managed as a single business unit that provides scheduled air transportation for passengers and cargo throughout the United States and around the world and includes its loyalty program, as well as other ancillary businesses. Its refinery segment operates for the benefit of the airline segment by providing jet fuel to the airline segment from its own production and through jet fuel obtained through agreements with third parties. The refinery's production consists of jet fuel as well as non-jet fuel products.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Strong Financial Performance: Despite challenges from a government shutdown, Delta achieved a record $63.4 billion in revenue for fiscal year 2025, a 2% increase from 2024, alongside a 3% capacity growth, showcasing the company's robust performance in a competitive airline market.
- Enhanced Shareholder Returns: The profit-sharing payout equates to an average of four weeks of additional pay for employees, combined with a raise in 2026, which is expected to boost employee loyalty and morale while laying a foundation for future growth in company performance.
- CEO Acknowledgment: Delta CEO Ed Bastian expressed gratitude to employees for their outstanding performance in 2025 in a letter, emphasizing the importance of teamwork in the company's success and further enhancing corporate culture and employee cohesion.
See More
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- Technological Edge: Joby's S4 eVTOLs utilize tilt-rotor technology, making them faster and more energy-efficient than competitors like Archer Aviation, which could enable Joby to dominate the emerging eVTOL market and replace traditional helicopters.
- Investor Backing: The company has garnered significant support from major investors and customers, including Toyota, Delta Air Lines, and the U.S. Air Force, which not only boosts market confidence but also lays a solid foundation for future growth.
- Acquisition Strategy: Joby's acquisition of Uber's Elevate aerial ride-hailing division in 2020 and Blade's helicopter service last year provides robust support for its future air taxi services, enhancing its operational capabilities.
- Market Outlook: With the FAA expected to approve Joby's first commercial flights this year and the launch of its air taxi services in Dubai, these catalysts could drive its stock price higher, despite a high projected P/E ratio of 47 times its 2027 sales.
See More
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- Profit Expectations Improve: Isom mentioned in a video that the company anticipates a significant profit increase this year, with adjusted earnings per share potentially reaching $2.70, a substantial rise from last year's $0.36, indicating efforts to enhance financial performance.
- Schedule and Service Enhancements: American Airlines is adjusting its schedules, particularly at Dallas-Fort Worth International Airport, to improve flight punctuality, although its current 73.7% on-time rate ranks it low in the industry, highlighting the urgency to enhance customer experience.
- Employee Morale Declines: The decline in profits has led to a smaller profit-sharing pool for employees, causing disappointment among staff, with the union stating that the airline needs stronger accountability and decisive action to maintain competitiveness.
See More
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- Employee Protest: American Airlines flight attendants are set to picket at the corporate headquarters in Fort Worth, Texas, to exert pressure on CEO Robert Isom amid concerns over lagging profitability compared to rivals, indicating significant employee dissatisfaction with leadership.
- Profit Expectations vs. Employee Confidence: Despite Isom's assertion in a video that the airline expects a substantial profit increase this year, with adjusted earnings per share potentially reaching $2.70, employee frustration remains high regarding the company's reliability and financial performance, particularly following difficulties in recovery from major winter storms.
- Union Vote of No Confidence: The Association of Professional Flight Attendants issued a vote of no confidence in Isom, marking the first such action by the union, which underscores strong employee discontent with leadership, especially as the airline trails Delta and United in profitability and punctuality.
- Future Development Strategy: In a meeting with about 6,000 managers, Isom emphasized the airline's goals for the next 100 years, and despite facing employee protests and profit pressures, he remains committed to enhancing market competitiveness through upgraded cabin facilities and expanded airport lounges.
See More
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- Market Rally Halted: After a consecutive rise, the stock market rally paused for a second session, indicating cautious sentiment among investors who are adopting a wait-and-see approach regarding future trends.
- Earnings Impact Significant: Earnings reports from giants Cisco and McDonald's have drawn widespread attention from investors, potentially influencing overall market sentiment and short-term trading strategies.
- Investor Sentiment Cautious: With the market rally's pause, investors may react more sensitively to upcoming earnings reports and economic data, which could affect market volatility and liquidity.
- Uncertain Future Outlook: As the market awaits more earnings and economic indicators, investor uncertainty about future market directions may lead to a reduction in trading activity in the short term.
See More
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- Market Divergence: The highest-earning 10% of U.S. households now account for nearly 50% of consumer spending, a significant increase from just over one-third 30 years ago, highlighting a deepening K-shaped recovery that pressures lower-income households.
- Corporate Strategies: Airlines like Delta and United are shifting their profit focus towards high-end markets by leveraging corporate travel and loyalty programs, reflecting a reliance on affluent consumers for revenue generation.
- Price Adjustments: PepsiCo has cut prices on snacks by up to 15% in response to consumer backlash against previous price hikes, indicating a decline in purchasing power among lower-income consumers and forcing companies to adapt their strategies to maintain market share.
- Wage Growth Disparity: Bank of America reports that wage growth for lower- and middle-income households is lagging at 0.9% and 1.6%, respectively, compared to 3.7% for higher-income households, exacerbating the divergence in consumer spending capabilities.
See More
