BoFA Expects DeltaTo Maintain 10% EPS Growth in 2025, Sees Strong Q4 Result
Analyst Upgrades Delta Air Lines: BofA Securities analyst Andrew G. Didora raised Delta Air Lines' fourth-quarter revenue growth estimate to +4.3% and EPS estimate to $1.78, maintaining a Buy rating with a price target of $72 ahead of the earnings release on January 10, 2025.
Future Projections: Didora anticipates continued revenue growth exceeding 5% each quarter in 2025, with an estimated EPS range of $7-$8, while also noting that DAL shares rose by 2.89% to $60.71 recently.
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- Impact of Rising Oil Prices: The escalating tensions around the Strait of Hormuz have driven oil prices up by approximately 17% over the past month, creating margin pressure for airlines, particularly as most U.S. carriers have ceased hedging fuel costs.
- ETF Investor Reassessment: As airline ETFs struggle, investors are recalibrating their portfolios, with the U.S. Global Jets ETF showing positive momentum, while MAX Airlines 3X Leveraged ETNs introduce additional volatility, posing risks in a headline-driven market.
- Energy ETFs Benefit from Supply-Risk Premium: In stark contrast to airline ETFs, oil-linked funds are benefiting from a supply-risk premium, with the iShares Global Energy ETF incorporating multinational oil producers, offering broader global energy exposure.
- Emerging Arbitrage Strategy: With crude prices remaining elevated, airlines face structural cost pressures while energy producers enjoy pricing leverage, setting up a potential pairs trading strategy of going long on energy ETFs and short on airline ETFs, although this strategy requires close monitoring of geopolitical developments.
- Stock Market Decline: The S&P 500 index fell by 2.18%, reaching a 3.25-month low, indicating market concerns over the Iran conflict that may lead to decreased investor confidence and increased volatility.
- Surge in Oil Prices: WTI crude oil prices rose over 8% to an 8.5-month high due to Iran's threats to close the Strait of Hormuz, potentially causing long-term disruptions in global energy markets and raising inflation expectations.
- Rising Bond Yields: The 10-year German bund yield climbed to a 2.5-week high of 2.814%, reflecting market worries about future inflation, which may prompt investors to shift towards bonds for safety.
- Economic Data Focus: This week, the market will focus on U.S. employment data and economic indicators, with the ADP employment change expected to rise by 40,000 and the ISM services index anticipated to slip slightly, indicating potential economic slowdown.
- Market Decline: The S&P 500 index fell by 1.82%, the Dow Jones Industrial Average dropped by 2.07%, and the Nasdaq 100 decreased by 1.78%, marking a 2.5-month low for the S&P 500, indicating growing concerns about the global economic outlook.
- Surging Oil Prices: WTI crude oil prices surged over 7% to an 8.5-month high due to escalating conflict in Iran, raising fears of energy supply disruptions and increasing inflation expectations, which negatively impact stock market performance.
- Rising Bond Yields: The 10-year German bund yield reached a 2.5-week high of 2.814%, while the 10-year UK gilt yield climbed to a 3-week high of 4.536%, reflecting market concerns over future inflation, further pressuring stock prices.
- Earnings Outlook: Despite market volatility, 73% of S&P 500 companies exceeded earnings expectations, with Q4 earnings growth projected at 8.4%, indicating strong corporate fundamentals, yet market sentiment remains subdued.
U.S. Government Advisory: The U.S. government is advising Americans stranded in the Middle East to return home using commercial travel options.
Challenges in Travel: The recommendation to use commercial means for returning home is complicated by the current situation in the region.
U.S. Airlines' Share Price Decline: U.S. airline stocks have experienced a significant drop due to escalating tensions from the U.S.-Iran conflict.
Impact on Fuel Prices: The conflict has led to a spike in fuel prices, further affecting the airline industry's financial stability.
- Escalating Conflict in Iran: The U.S. Central Command reported that six American service members have been killed in action, an increase from four the previous day, indicating the severity of the situation which could have profound implications for global markets.
- Surging Oil Prices: The closure of the Strait of Hormuz by Iran has led to a sharp increase in global oil prices, with a $10 per barrel rise potentially translating to a 25-cent hike at the pump, exacerbating inflationary pressures.
- Target's Earnings Report: Target's fourth-quarter earnings exceeded Wall Street expectations, with shares rising 4% in pre-market trading; however, the retailer reported declining revenue and store traffic, indicating a trend of weakening consumer demand.
- Apple's New Product Launch: Apple introduced the iPhone 17e, priced starting at $599, and updated the iPad Air with the M4 chip while maintaining the same design and price, demonstrating its commitment to innovation in a highly competitive market.








