Southwest Airlines (NYSE:LUV) Rating Lowered to "Strong Sell" at Zacks Research

Key Points

• Zacks Research downgraded Southwest Airlines to “Strong Sell” from “Hold,” adding to a mixed analyst outlook. MarketBeat reports an average rating of “Hold” and an average price target of $47.45.
• Southwest’s stock opened at $41.77, with a market capitalization of about $20.43 billion and a 52-week range of $29.26 to $55.11. The company recently exceeded quarterly earnings and revenue expectations, reporting $0.94 in EPS and $8.72 billion in revenue.
• Institutional ownership remains substantial at 80.82%, with major investors including Primecap Management and BlackRock establishing significant positions during the second quarter.

Southwest Airlines (NYSE:LUV - Get Free Report) was downgraded by equities researchers at Zacks Research from a "hold" rating to a "strong sell" rating in a note issued to investors on Tuesday, Zacks reports.

Other equities analysts have also issued research reports about the company. TD Cowen cut their price target on Southwest Airlines from $48.00 to $47.00 and set a "buy" rating on the stock in a research note on Friday, October 2nd. Bank of America raised their target price on shares of Southwest Airlines from $40.00 to $45.00 and gave the company an "underperform" rating in a research report on Wednesday, July 1st. Morgan Stanley upped their price target on shares of Southwest Airlines from $60.00 to $65.00 and gave the stock an "overweight" rating in a research report on Monday, July 6th. BMO Capital Markets cut their price objective on shares of Southwest Airlines from $60.00 to $50.00 and set an "outperform" rating on the stock in a report on Monday, September 28th. Finally, Citigroup reduced their price objective on shares of Southwest Airlines from $55.00 to $50.00 and set a "neutral" rating for the company in a research note on Friday, July 24th. Nine investment analysts have rated the stock with a Buy rating, nine have assigned a Hold rating and four have assigned a Sell rating to the company's stock. Based on data from MarketBeat, Southwest Airlines has an average rating of "Hold" and an average price target of $47.45.

Southwest Airlines Price Performance

Southwest Airlines stock opened at $41.77 on Tuesday. The company has a debt-to-equity ratio of 0.54, a current ratio of 0.49 and a quick ratio of 0.42. The stock has a market cap of $20.43 billion, a price-to-earnings ratio of 25.62, a price-to-earnings-growth ratio of 0.41 and a beta of 1.16. The firm has a 50-day moving average of $41.92 and a two-hundred day moving average of $42.75. Southwest Airlines has a 1 year low of $29.26 and a 1 year high of $55.11.

Southwest Airlines (NYSE:LUV - Get Free Report) last issued its earnings results on Wednesday, July 22nd. The airline reported $0.94 EPS for the quarter, topping analysts' consensus estimates of $0.52 by $0.42. Southwest Airlines had a net margin of 2.78% and a return on equity of 14.15%. The business had revenue of $8.72 billion for the quarter, compared to analyst estimates of $8.58 billion. During the same period last year, the company posted $0.43 earnings per share. The company's quarterly revenue was up 16.4% compared to the same quarter last year. Southwest Airlines has set its FY 2026 guidance at 3.250-4.250 EPS and its Q3 2026 guidance at 0.500-0.750 EPS. On average, research analysts forecast that Southwest Airlines will post 3.16 earnings per share for the current year.

Institutional Investors Weigh In On Southwest Airlines

A number of hedge funds and other institutional investors have recently added to or reduced their stakes in LUV. Primecap Management Co. CA purchased a new stake in shares of Southwest Airlines during the second quarter worth about $2,509,179,000. BlackRock Inc. purchased a new stake in Southwest Airlines during the 2nd quarter worth approximately $1,538,382,000. Bank of New York Mellon Corp purchased a new stake in Southwest Airlines during the 2nd quarter worth approximately $234,872,000. Dimensional Fund Advisors LP increased its stake in Southwest Airlines by 2.1% during the 1st quarter. Dimensional Fund Advisors LP now owns 5,763,154 shares of the airline's stock valued at $216,472,000 after purchasing an additional 117,833 shares in the last quarter. Finally, Capitolis Liquid Global Markets LLC raised its holdings in shares of Southwest Airlines by 51.4% in the fourth quarter. Capitolis Liquid Global Markets LLC now owns 3,443,500 shares of the airline's stock worth $142,320,000 after buying an additional 1,169,150 shares during the last quarter. 80.82% of the stock is currently owned by hedge funds and other institutional investors.

Key Southwest Airlines News

Here are the key news stories impacting Southwest Airlines this week:

• Positive Sentiment: Southwest launched a first-of-its-kind U.S. airline plugin in ChatGPT, developed with OpenAI and Amazon Web Services. The tool lets travelers discover destinations, plan trips and shop for Southwest flights earlier in the booking process, potentially improving customer engagement and direct sales. Southwest Airlines launches first-of-its-kind U.S. airline plugin in ChatGPT
• Neutral Sentiment: Susquehanna lowered its Southwest price target from $50 to $45 and moved to a neutral rating. Although the revised target implies potential upside from the current trading level, the reduction signals more limited analyst confidence in the stock’s near-term appreciation.
• Neutral Sentiment: Citi assigned Southwest a hold rating, adding to a cautious analyst outlook rather than providing a catalyst for buyers. Southwest Airlines receives a hold from Citi
• Negative Sentiment: Bank of America Securities reaffirmed its sell rating on LUV, reinforcing concerns about Southwest’s earnings outlook and operating performance. Bank of America Securities reaffirms sell rating on Southwest Airlines
• Negative Sentiment: Southwest was added to the Zacks Rank #5 “Strong Sell” list, increasing the stock’s near-term technical and sentiment pressure. New Strong Sell Stocks for October 7th
• Negative Sentiment: Airline shares are facing broader short-selling pressure as higher oil and gasoline prices raise fuel-cost and consumer-demand concerns. Investors appear to be treating energy prices and ongoing geopolitical risks as threats to airline margins.

Southwest Airlines Company Profile

Southwest Airlines Co is a U.S. commercial airline headquartered in Dallas, Texas, and listed on the New York Stock Exchange under the symbol LUV. The company was founded in 1967 and began operating scheduled passenger service in 1971, initially serving cities in Texas before expanding across the United States.

Southwest primarily provides scheduled air transportation for passengers and also offers air cargo services. Its operations are centered on a large Boeing 737 fleet, supporting frequent service between major cities and regional airports.

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