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Country: US
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Fundamental View
AS OF 18 Jul 2025Delta’s focus on premium cabin and atlantic flying driven by its loyalty program lead the airline to enjoy industry best profitability. Delta targets 1x gross leverage, an A level balance sheet in our view.
Full-year guidance was reinstated at better-than-consensus levels with the 2Q earnings.
Delta has Outperformed peers this year on its strong credit quality and defensive nature. We are retaining our O/P view and continue to favor DAL compared to LUV. We are happy to capture the basis between the two.
Business Description
AS OF 18 Jul 2025- DAL is one of the world's largest airlines with a network comparable to UAL and AAL in size and distribution. It is perceived by the flying public as the "most premium" of the Big Three network carriers in the US.
- DAL has an extensive global network of airline affiliations, including Air France/KLM, Virgin Atlantic, Aeromexico, LATAM, and China Eastern.
- DAL management is the most evolved of the US network airlines, previously focused on used aircraft to lower capital costs and setting up full-cycle maintenance programs, buying a refinery to hedge crack spread, and developing non-commodity products including the leading loyalty program.
Risk & Catalysts
AS OF 18 Jul 2025DAL faces all the industry exogenous risks: geopolitical events, pandemics, oil price volatility, and now recessionary fears.
The recently weaker dollar may manifest as a headwind to international demand. DAL was able to capitalize on strong Atlantic recovery post-pandemic through its extensive existing network; however, it lost its status as the number one airline on US-Europe routes to United which grew very fast in the segment and now occupies the first spot.
The airline noted that demand winds have shifted swiftly after the tariff talks started to pick up. CEO Ed Bastian noted that there was a significant drop in demand, both for consumers in the main cabin and for business travelers. While the premium cabin is currently holding up, it remains to be seen if the recession fears will hit that demand segment as well.
DAL’s 1x leverage target is the lowest target in the industry.
Key Metric
AS OF 18 Jul 2025| $ mn | Y22 | Y23 | Y24 | LTM 2Q25 |
|---|---|---|---|---|
| Revenue | 50,582 | 58,048 | 61,642 | 61,924 |
| EBIT | 3,661 | 5,521 | 5,995 | 5,785 |
| EBITDAR | 6,276 | 8,394 | 9,056 | 8,820 |
| Cash | 3,266 | 2,741 | 3,069 | 3,331 |
| Short Term Investments | 8,412 | 10,061 | 721 | 8 |
| Net Debt | 16,634 | 16,269 | 13,151 | 11,730 |
| Adjusted Debt/LTM EBITDAR | 4.9x | 3.3x | 2.5x | 2.4x |
CreditSight View Comment
AS OF 18 Jul 2025Delta’s 2Q25 was yet another reminder of the power of its premium-driven business model. While competitors are pulling capacity, Delta is powering through, driven by strength in its premium segment. The Delta credit story remains intact, with $3bn of debt paydown on track for this year, on the way toward a 1.0x leverage target in the coming years. Delta’s measure of adjusted leverage was 2.5x, down 0.1x sequentially on debt retirement. We retain our Outperform view on Delta and continue to expect ratings upgrades into the A category as the company executes on its capital structure target. We still like the long Delta/short LUV trade, with a 15-20 bp basis.
Recommendation Reviewed: July 18, 2025
Recommendation Changed: April 12, 2024
Who We Recommend
Woori Financial Group
Shinhan Financial Group
Reliance Industries
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Search topics about wealth insights and investments.Meta Platforms
- Sector: TechnologyTechnology Media and Telecommunications
- Sub Sector: Technology
- Country: US
- Bond: META 4.95 33
- Indicative Yield-to-Maturity (YTM): 4.95%
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Fundamental View
AS OF 25 Feb 2025We are encouraged by Meta’s strong advertising growth relative to peers in 2023 and 2024. Meta has extremely strong credit metrics of 0.3x gross leverage and $49 bn net cash. We continue to expect Meta to be a regular/annual issuer to fund its shareholder returns and massive investments in AI and the metaverse.
Longer term, we expect Meta to adhere to its previously communicated financial policy of maintaining a positive or neutral cash balance. Meta does have legal and regulatory risks notably an FTC suit that seeks to unwind its prior acquisitions of Instagram and WhatsApp. However, not all event risk is negative as Meta would be the greatest beneficiary from a potential TikTok ban.
Business Description
AS OF 25 Feb 2025- Meta Platforms is the largest social networking company in the world. Meta generates substantially all of its revenue from advertising which includes Facebook, Instagram, Messenger, and third-party affiliated websites or mobile applications.
- In 4Q24, Family of Apps was 98% of revenue (96.7% from advertising and 1.1% from other) and Reality Labs was 2% of revenue. Reality Labs generated $17.7 bn in operating losses during LTM 4Q24 as the company is investing heavily in the metaverse.
- There are 3.35 bn Family Daily Active People (DAP) as of 4Q24, and the Family Average Revenue per Person (ARPP) was $14.25 quarterly in 4Q24.
- Meta is headquartered in Menlo Park, California. Employee headcount was >74k at 4Q24.
Risk & Catalysts
AS OF 25 Feb 2025In December 2020, the FTC filed a lawsuit against Meta targeting its acquisitions of Instagram and Whatsapp. If Meta is forced to unwind prior acquisitions, this would be a credit negative given reduced scale and diversification.
Meta’s business model relies almost entirely on user-generated content. As such, there are risks related to customer privacy (e.g., Cambridge Analytica data scandal in 2018) and regulatory changes (e.g., Section 230 protections).
In April 2024, the US signed into law a bill requiring a sale or ban of TikTok, although Trump signed an executive order instructing the Attorney General to not enforce the TikTok ban for 75 days (to 4/5/2025). If a ban is implemented, this would positively impact Meta and others with competing short-form video products.
In October 2022, activist Altimeter Capital wrote a letter to Zuck and Board although it was on the friendly-side of activism and some suggestions have already been implemented.
Key Metric
AS OF 25 Feb 2025| $ mn | 2020 | 2021 | 2022 | 2023 | LTM 4Q24 |
|---|---|---|---|---|---|
| Revenue YoY % | 21.6% | 37.2% | (1.1%) | 15.7% | 21.9% |
| EBITDA | 46,069 | 63,882 | 49,622 | 71,955 | 101,568 |
| EBITDA Margin | 53.6% | 54.2% | 42.6% | 53.3% | 61.7% |
| CapEx % of Sales | 18.3% | 16.3% | 27.5% | 20.8% | 23.8% |
| Sh. Ret. % of CFO-CapEx | 27% | 116% | 152% | 46% | 68% |
| Net Debt | (61,954) | (47,998) | (30,815) | (47,018) | (48,989) |
| Gross Leverage | 0.0x | 0.0x | 0.2x | 0.3x | 0.3x |
| EV / EBITDA | 15.8x | 14.0x | 5.8x | 12.3x | 14.5x |
CreditSight View Comment
AS OF 01 May 2025We are encouraged by Meta’s strong advertising growth relative to peers in 2023, 2024, and 1Q25. Meta has extremely strong credit metrics of 0.3x gross leverage and $41 bn net cash. We continue to expect Meta to be a regular/annual issuer to fund its shareholder returns and massive investments in AI and the metaverse. Longer term, we expect Meta to adhere to its previously communicated financial policy of maintaining a positive or neutral cash balance. Meta does have legal and regulatory risks notably an FTC suit that seeks to unwind its prior acquisitions of Instagram and WhatsApp. In addition, the recent EC decision could have an impact as early as 3Q25. However, not all event risk is negative as Meta would be the greatest beneficiary from a potential TikTok ban.
Recommendation Reviewed: May 01, 2025
Recommendation Changed: April 18, 2024
Who We Recommend
Woori Financial Group
Shinhan Financial Group
Reliance Industries