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The Consensus EPS Estimates For Delta Air Lines, Inc. (NYSE:DAL) Just Fell A Lot

Market forces rained on the parade of Delta Air Lines, Inc. (NYSE:DAL) shareholders today, when the analysts downgraded their forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the latest downgrade, the current consensus, from the 16 analysts covering Delta Air Lines, is for revenues of US$36b in 2020, which would reflect a stressful 24% reduction in Delta Air Lines' sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$44b in 2020. It looks like forecasts have become a fair bit less optimistic on Delta Air Lines, given the substantial drop in revenue estimates.

Check out our latest analysis for Delta Air Lines

NYSE:DAL Past and Future Earnings March 31st 2020
NYSE:DAL Past and Future Earnings March 31st 2020

The consensus price target fell 14% to US$51.06, with the analysts clearly less optimistic about Delta Air Lines' valuation following this update. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Delta Air Lines, with the most bullish analyst valuing it at US$90.00 and the most bearish at US$27.00 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 24%, a significant reduction from annual growth of 3.0% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.6% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Delta Air Lines is expected to lag the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Delta Air Lines this year. They're also anticipating slower revenue growth than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Delta Air Lines.

Worse, Delta Air Lines is labouring under a substantial debt burden, which - if today's forecasts prove accurate - the forecast downgrade could potentially exacerbate. You can learn more about our debt analysis for free on our platform here.

You can also see our analysis of Delta Air Lines' Board and CEO remuneration and experience, and whether company insiders have been buying stock.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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