NEW YORK (TheStreet) -- Shares of Delta Air Lines Inc (DAL) were down 4.76% to $40.86 in afternoon trading Monday, after analysts at Raymond James downgraded the airline to "outperform" from "strong buy" earlier this morning.
The firm also slashed its price target to $54 from $60, reflecting the "lower near term upside."
Analysts at Raymond James said that while the U.S. airline industry is "maintaining capacity discipline," the recovery in pricing "heading into the seasonally stronger summer months" is expected to be muted.
The firm added that it expects softer-than-anticipated domestic economic growth.
In addition, Raymond James downgraded American Airlines Group (AAL) to "market perform" from "outperform."
Also, Delta Air Lines was approached about investing in Skymark Airlines (SKALF) to help revive it from bankruptcy, Reuters reports.
Skymark is a Japanese budget airline carrier.
Atlanta, Ga.-based Delta Air Lines provides scheduled air transportation for passengers and cargo through its route network, centered around the hub system it operates at airports in Amsterdam, Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St. Paul, New York-JFK, Paris-Charles de Gaulle, Salt Lake City and Tokyo-Narita.
Separately, TheStreet Ratings team rates DELTA AIR LINES INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate DELTA AIR LINES INC (DAL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, growth in earnings per share and increase in net income. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- DAL's revenue growth has slightly outpaced the industry average of 3.2%. Since the same quarter one year prior, revenues slightly increased by 5.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- DELTA AIR LINES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DELTA AIR LINES INC reported lower earnings of $0.75 versus $12.29 in the prior year. This year, the market expects an improvement in earnings ($4.56 versus $0.75).
- Net operating cash flow has significantly increased by 72.02% to $1,636.00 million when compared to the same quarter last year. Despite an increase in cash flow, DELTA AIR LINES INC's average is still marginally south of the industry average growth rate of 75.22%.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Airlines industry average, but is greater than that of the S&P 500. The net income increased by 250.2% when compared to the same quarter one year prior, rising from $213.00 million to $746.00 million.
- The gross profit margin for DELTA AIR LINES INC is currently lower than what is desirable, coming in at 29.36%. Regardless of DAL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, DAL's net profit margin of 7.94% compares favorably to the industry average.
- You can view the full analysis from the report here: DAL Ratings Report