Delta Air Lines (DAL) is well positioned for further share gains after a strong Q2 performance underscored resilient travel demand and pricing power, with revenue and earnings growth potential not fully reflected in the stock, UBS Securities said in a report emailed Monday.

The firm said strong Q2 revenues and a "bullish" outlook for Q3 and Q4 suggest consumer demand and yields remain healthy. Limited capacity growth, coupled with stronger contributions from cargo, maintenance and repair operations, and other revenue streams, should support continued pricing strength and earnings growth, the report said.

UBS forecasts revenue growth of 16.1% in Q3 and 17.7% in Q4, while estimating fiscal 2027 earnings per share of $10.20. Delta shares trade at about 8.5 times that estimate, leaving room for valuation expansion as investors recognize the company's earnings potential, UBS analysts said in the report.

While some investors view Delta's implied Q4 guidance as "optimistic" given tougher comparisons, UBS believes the outlook is "achievable" and raised the price target on the stock to $112 from $107, while reiterating a buy rating.

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