On Thursday, Susquehanna maintained a Positive rating on Delta Air Lines (NYSE:DAL) while slightly raising the price target to $55.00 from the previous $54.00. The adjustment reflects the analyst's observation of the company's transition into a period of optimization after a phase of normalizing growth.
Delta Air Lines has been closely monitored for its efficiency, particularly in the second half of the year, with a focus on full-time equivalents per available seat mile (FTEs p/ASM) as a key indicator for the exit rates for FY24's cost per available seat mile excluding fuel (CASM-ex). The airline's performance in this area is seen as critical for its financial health moving forward.
The analyst also anticipates that Delta's investor day in November will provide greater insight into the company's strategic direction, particularly regarding its international network. This focus comes as Delta's core domestic network continues to show robust performance.
For the first quarter, Delta reported an adjusted earnings per share (EPS) of $0.45, which met the high end of its March guidance range of $0.25 to $0.50 and exceeded the consensus estimate of $0.36 as well as the analyst's expectation of $0.35. The outperformance was attributed primarily to stronger operating results than initially projected by the analyst.
The airline's financial results and operational efficiency metrics will continue to be areas of interest for investors as Delta navigates through the remainder of the fiscal year and beyond.
InvestingPro Insights
Recent data from InvestingPro shows that Delta Air Lines (NYSE:DAL) is trading at a low earnings multiple, with an adjusted P/E ratio of 6.85 for the last twelve months as of Q4 2023. This could indicate a potential undervaluation of the company's stock, especially considering Delta's significant revenue growth of 14.76% over the same period. Additionally, the company has achieved a substantial price uptick of 30.97% over the last six months, highlighting positive market sentiment.
InvestingPro Tips suggest that Delta Air Lines is a prominent player in the Passenger Airlines industry, which aligns with the robust performance of its core domestic network mentioned in the article. Moreover, the company has been profitable over the last twelve months, with a gross profit of $13.0B and an operating income margin of 10.49%. These figures, along with Delta's return on assets of 6.32%, provide a solid financial backdrop for the company's strategic moves going forward.
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