Delta Air Lines (DAL) is slated to report its Q2 earnings per share slightly above the high-end of its guidance range of $1.00 to $1.50, with larger investor focus on forward outlook when the company posts its quarterly results on Friday, UBS said in a Wednesday note.
While the company is likely to be conservative with response to its fuel assumption for Q3 and Q4, especially with oil pricing moving higher again, the bar for fiscal 2026 EPS is likely in the range of $6 to $7, compared with Delta Air Lines outlook of $6.50 to $7.50 at the start of the year, UBS said.
There are assumptions that Delta needs to guide at least in-line with its initial guide to be considered good enough given the stock's performance, the firm noted.
UBS further said that for Delta Air Lines to guide to this range, one has to assume Q4 revenue growth consistent with Q3, despite tougher comparisons and possible greater consumer elasticity.
"In our view, that's a bit optimistic, notwithstanding some modest benefit from greater portion of booking curve exposed to fare increases in [Q4 versus Q3]," UBS analysts added.
UBS maintained its buy rating with a $107 price target.
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