Wall Street Slashes Price Targets For Airline Stocks By Up To 45%

Topline

As tariffs push investors into bear market territory, financial analysts see turbulence ahead for the airline sector–perhaps for the long term.

For the third straight day, traders on the floor of the New York Stock Exchange saw all three major … More stock indexes dip. (Photo by Michael M. Santiago)

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Key Facts

With financial markets tanking further Monday morning and consumer sentiment dropping, UBS cut its price targets for Delta Air Lines and United Airlines by 45% each and Alaska Airlines by 28% on Monday, while also downgrading the bank’s rating for those carriers from “buy” to “neutral.”

Susquehanna lowered its target on United Airlines by 31%, from $130 to $90, and also reduced fiscal 2025 and 2026 estimates for U.S. airlines.

Evercore ISI adjusted its price target for Delta by 13%, from $80 to $70, while continuing to recommend the stock with an “outperform” rating.

Last week, Jefferies analysts downgraded American, Delta, and Southwest, noting, “consumer sentiment continues to disappoint.”

The Dow Jones U.S. Airlines Index has fallen 16% since President Donald Trump’s “Liberation Day” tariffs were announced last week and 35% year to date.

Key Background

The airlines are facing increasingly challenging headwinds, as declining travel demand from Canada and Europe compounds lower discretionary spending in the U.S.. Add to the mix President Trump’s tariffs and the markets are spooked. In a note to investors, Susquehanna analyst Christopher Stathoulopoulos stressed that messaging around travel demand “needs to be clear” as investors “look to tease out leisure and business bookings into the spring and summer.” UBS analyst Thomas Wadewitz cited a weaker economic backdrop and increasing visibility to a potential recession, telling investors in a note that the firm expects domestic leisure headwinds and softening corporate travel to intensify. Meanwhile TD Cowen analyst Tom Fitzgerald wrote that, “Uncertainty regarding global trade policy looks unlikely to abate any time soon and the odds of a recession climb by the day.”

Crucial Quote

“The level of sell-off is worse than the reality right now, but it doesn’t necessarily mean it won’t be the reality six months from now,” Raymond James analyst Savanthi Syth told CNBC.

What To Watch For

Investors are looking ahead to the carriers’ first-quarter results, kicking off with Delta Air Lines on Wednesday morning and United Airlines on Tuesday, April 15. In particular, shareholders will be listening for executive commentary on demand outlook for this summer. Also watch for higher airfares, according to Syth: “While airline contracts generally have pricing protections, we expect the industry as a whole (and, in turn, passengers) to eventually bear any cost increases.”

Tangent

Major U.S. hotel stocks had already dropped 11% this year before taking a hit on Thursday by Trump’s tariff rollout. The Dow Jones Hotels Index is down 22% year to date as of Monday morning.