Delta Air Lines stock price target raised to $66 by Bernstein SocGen

Delta Air Lines (DAL) has received multiple price target upgrades from firms including Bernstein SocGen, Goldman Sachs, UBS, and Morgan Stanley, following robust Q2 results that exceeded expectations with $2.10 EPS and record $15.5 billion revenue. This positive re-rating is underpinned by Delta's re-established fiscal year 2025 guidance 8% above consensus, strong premium demand, and a strengthening American Express partnership. Management's plans for strategic capacity reductions and a positive full-year outlook, including projected free cash flow of $3-4 billion, are seen as reinforcing a structural bull case for the airline sector amid anticipated industry-wide capacity discipline.

Analysis

Delta Air Lines (DAL) is exhibiting strong operational and financial momentum, evidenced by its second-quarter 2025 results which surpassed market expectations. The airline reported adjusted earnings per share of $2.10, 2% ahead of consensus, on record quarterly revenue of $15.5 billion. This performance has triggered a wave of positive analyst re-ratings from firms including Bernstein SocGen, Goldman Sachs, UBS, and Morgan Stanley, who have all raised their price targets. Key drivers underpinning this optimism include robust premium demand, which is up 5% year-over-year, and a strengthening partnership with American Express, with remuneration up 10% and projected to reach $8 billion this year. While main cabin bookings have softened by 5%, the company's strategic plan to reduce capacity in the second half of the year, coupled with anticipated industry-wide capacity discipline, is expected to improve revenue per available seat mile (RASM) trends. Management has reinforced this positive outlook by re-establishing fiscal year 2025 guidance at a level 8% above consensus and projecting significant free cash flow of $3-4 billion, all while the stock trades at an attractive P/E ratio of 7.37x.

Key Decisions for Investors

• Given the strong earnings beat, upwardly revised guidance, and a consensus of analyst upgrades, investors might consider the stock's P/E ratio of 7.37x an attractive valuation, suggesting further upside potential despite the recent 11.64% gain.
• It is crucial to monitor the divergence between strong premium cabin demand (+5%) and weakening main cabin demand (-5%), as the company's ability to manage this mix will be a key determinant of future profitability.
• Investors should track the execution and impact of management's planned capacity reductions in the second half, as this strategy is central to the thesis of improving unit revenues and reinforcing the structural bull case for the airline.