Goldman Sachs Sees Delta's Long-Term Growth On Track: EPS To Hit $9.50 By FY26

Goldman Sachs analyst Catherine O’Brien expressed views on Delta Air Lines, Inc. DAL Investor Day in New York yesterday.

Delta’s three-to-five-year financial framework targets mid-teens operating margins, 10% average annual EPS growth, and $3 billion-$5 billion in annual free cash flow.

Delta reaffirmed its expected fourth-quarter financial guidance.

The company also provided preliminary commentary on 2025 for capacity growth of three to four percent year-over-year, revenue growth of mid-single digits and non-fuel unit cost growth of low-single digits year-over-year. 

The analyst maintained a Buy rating on Delta Air Lines. O’Brien writes that Delta plans to strengthen its segmentation strategy by testing new products in Main Cabin starting in 2025.

The analyst also notes that the airline’s premium products drive the highest margins, with stable demand evidenced by an 85% repurchase rate.

O’Brien writes that Delta’s solid balance sheet includes new targets of 1.0x gross leverage and $40 billion in unencumbered assets, which will provide financial durability through market cycles.

The analyst estimates EPS of $6.05 in FY24, $8.25 in FY25 and $9.50 in FY26.

Investors can gain exposure to the stock via U.S. Global Jets ETF JETS and Defiance Hotel, Airline, and Cruise ETF CRUZ.

Price Action: DAL shares are up 1.21% at $64.41 at the last check Thursday.

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