Delta shares were surging early Tuesday as the broader rally lifted airline stocks.

Japan Airlines announced late Monday that it will stay with American Airlines, instead of shifting to Delta and the Skyteam alliance. The move is an effort to limit disruptions during the equivalent of the bankruptcy filing process, according to reports.

For Delta, we believe this is a non-event in the short term, as they have access to Asian markets through its large Pacific division (formerly Northwest Airlines), wrote Jesup and Lamont analyst Helane Becker.

Delta shares have fallen more than 12% in the last week amid a 5% decline in its January traffic, a downgrade from JP Morgan Chase and reports that JAL was planning to stick with American.

But the stock made up for most of that lost ground Tuesday, gaining strength from a larger rally that also sent AMR and UAL up 9% and 13%, respectively, and the NYSE Arca Airline Index (XAL) up 6%.

The bottom line: We are maintaining our Buy rating on the common shares of Delta Air Lines and would use any pullbacks as a chance to establish or add to positions, wrote Becker.

Apparently that s just what some investors did.

Electronic Arts Down

Electronic Arts shares were falling early Tuesday after the company presented a disappointing outlook.

The videogame company forecast an adjusted profit, of two cents to six cents a share for the March quarter, on revenue of $800 million to $850 million. Analysts had pegged 13 cents a share, on $950 in sales.

For the fiscal year ending in March 2011, the company expects earnings of 50 cents to 70 cents a share on revenue of $3.65 billion to $3.9 billion, well below Wall Street s view of 74 cents a share on $4.07 billion in sales.

ERTS remains in a turnaround mode with its cost structure, relative to growth prospects, still seemingly high despite management promising $100 million in incremental operating cost reductions in fiscal 2011, wrote Sterne Agee analyst Arvind Bhatia.

Operating margins in 2011 are expected to increase to 7% from 4% in 2010, from a better revenue mix. That s still well short of past levels. But EA s digital business remains a source of some optimism, says Bhatia, with decent growth and forecast operating margins of 20% for the more mature segments within digital.

The bottom line: Ultimately, we believe management remains under pressure to enhance margins as investors grow weary of under-performance, wrote Bhatia. That said, Bhatia kept a buy rating and $20 target price, based on a sum-of-the-parts valuation.