Susquehanna cuts airline price targets amid higher fuel costs

Investing.com -- Susquehanna Financial Group lowered price targets for eight airline stocks on Wednesday, citing higher fuel prices that are expected to weigh on earnings through 2027.

The firm reduced its price target for Delta Air Lines to $100 from $100, while maintaining a Positive rating. United Airlines Holdings saw its target cut to $150 from $165, and American Airlines Group was lowered to $15 from $20. Both carriers retained Positive ratings.

Alaska Air Group had its target reduced to $50 from $55, keeping a Positive rating. Southwest Airlines was cut to $45 from $50 with a Neutral rating.

Among low-cost carriers, Allegiant Travel was lowered to $85 from $110, JetBlue Airways to $4 from $6, and Frontier Group to $6 from $7. All three maintained Neutral ratings.

Analyst Christopher Stathoulopoulos lowered 2H26 and FY27 estimates to reflect jet fuel prices above $4 per gallon. The firm adjusted its forecast for Delta's third quarter earnings to $1.65 per share from $2.20 previously, below the company's early July guidance of $2 to $2.50.

For fiscal year 2027, Susquehanna cut its Delta earnings estimate to $7.30 per share from $8.80, compared to consensus of $8.04. The firm expects capacity to grow 3%, with unit revenue up 1.9%.

Delta reports third quarter results Friday, marking the start of earnings season for the airline sector. Stathoulopoulos said unit revenue performance into the fourth quarter and early 2027 will be a key focus area.

The analyst noted that U.S. domestic capacity is growing at low single digits in the fourth quarter, while TSA volumes show improving trends. According to Hopper data cited in the report, U.S. domestic round-trip tickets for Thanksgiving are up about 30% year-over-year, with Christmas fares up more than 20%.

Susquehanna raised its target valuation multiples above historical averages to account for fuel expense as a headwind on earnings.

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