Raymond James reiterates Strong Buy on Delta Air Lines stock with $60 target

Delta Air Lines (DAL) significantly surpassed Q2 2025 consensus with adjusted EPS of $2.10 and restored its full-year 2025 EPS guidance to $5.25-$6.25, exceeding current market expectations despite being below initial January forecasts. This positive outlook, driven by improved revenue and non-fuel cost projections, prompted Raymond James, Citi, and Goldman Sachs to reiterate Buy ratings, though UBS lowered its price target on cautious demand. DAL anticipates improving revenue per available seat mile (RASM) trends in H2 2025 as industry capacity adjusts, signaling potential tailwinds for the airline.

Analysis

Delta Air Lines (DAL) has demonstrated improved operational and financial control, evidenced by its Q2 2025 adjusted earnings per share of $2.10, which surpassed consensus estimates. The carrier has reinstated its full-year 2025 EPS guidance to a range of $5.25-$6.25. While this is below its initial January outlook of $7.35, it notably exceeds recently lowered market expectations of $4.50-$5.50 and the consensus estimate of $5.38, signaling renewed confidence from management. This optimism is reportedly fueled by better-than-expected revenue and non-fuel cost outlooks. A key forward-looking indicator is the anticipated improvement in revenue per available seat mile (RASM) throughout the second half of 2025, which Delta attributes to capacity adjustments and broader industry supply rationalization. The positive sentiment is shared by Raymond James, Citi, and Goldman Sachs, who reiterated Buy ratings with price targets between $60 and $62. However, a note of caution is introduced by UBS, which lowered its price target to $63, citing a cautious demand outlook, and by potential operational disruptions such as the French air traffic controller strike. The stock's current P/E ratio of 8.8x is presented as an attractive valuation metric given these developments.

Key Decisions for Investors

• Given the strong earnings beat, reinstated guidance exceeding current market expectations, and multiple analyst upgrades, investors could view the current valuation as an attractive entry point.
• Monitor revenue per available seat mile (RASM) trends in the second half of 2025, as materialization of the expected improvement is critical to validating the company's positive guidance.
• Investors should remain vigilant of macroeconomic indicators related to travel demand to assess the risk highlighted by UBS's cautious outlook, which could challenge the optimistic revenue projections.