Delta Air Lines (NYSE:DAL) stock soared in early trading after posting stronger-than-expected third-quarter earnings, driven by rising revenue and robust corporate travel, prompting the airline to lift its full-year profit outlook and signal continued momentum into the fourth quarter.
Goldman Sachs analyst Catherine O’Brien gave a positive review of Delta Air Lines’ third-quarter results, noting that the company’s adjusted EPS of $1.71 exceeded the FactSet consensus of $1.53 and Goldman Sachs’ estimate of $1.45.
This result was close to the high end of Delta’s initial guidance range of $1.25 to $1.75, which was confirmed in September. The earnings beat was largely driven by stronger-than-expected revenue, with unit revenue (RASM) rising by 0.3%, beating the analyst’s forecast of a 0.8% decline.
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O’Brien expressed confidence in Delta’s fourth-quarter outlook. The airline expects EPS between $1.60 and $1.90, with the midpoint above both the consensus estimate of $1.65 and Goldman Sachs’ forecast of $1.49.
Delta also expects top-line growth of 2% to 4% year-over-year, surpassing Goldman Sachs’ projection of 1.1%.
While Delta did not provide specific capacity guidance, the latest schedule data shows a 2% increase in the fourth quarter capacity, which is expected to drive RASM growth of up to 2%, a notable improvement from the 0.3% growth in the third quarter.
For fiscal 2025, Delta raised its EPS guidance to approximately $6.00, at the high end of its previous range of $5.25 to $6.25, and ahead of the consensus estimate of $5.80.
O’Brien also highlighted the acceleration in corporate revenue growth, with corporate sales rising 8% in the third quarter of 2025, compared to low-single-digit growth earlier in the year.
O’Brien identified risks to Delta’s outlook, including macroeconomic pressures on premium product demand, potential delivery delays from Airbus (OTC:EADSF) or Boeing (NYSE:BA), and a slowdown in corporate travel demand, which Delta is more exposed to than its peers.
O’Brien maintained her 12-month price forecast of $68.00, based on a normalized EBITDAR valuation, using a 4.4x EV/EBITDAR multiple applied to a normalized EBITDAR estimate of $14.7 billion. This target implies a 19% upside from Delta’s current price of $57.12.
Price Action: DAL shares were trading 4.39% higher at $59.63 at last check Thursday.
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