Southwest Airlines (NYSE:LUV) Shares Gap Up - Still a Buy?

Key Points

• Shares gapped up premarket from $40.63 to $43.34 and last traded at $44.39, putting the stock slightly above its 50‑day moving average of $44.18.
• Analyst coverage is mixed: the consensus rating is Hold with a consensus price target of $43.72, while individual price‑target moves range from Morgan Stanley’s $55 (overweight) to several recent cuts into the mid‑$40s.
• Company fundamentals show a modest EPS beat (Q: $0.58 vs. $0.56 estimate) but a revenue miss, 7.4% YoY revenue growth, a quarterly dividend yielding 1.7% (85.7% payout ratio), and roughly 80.8% institutional ownership.

Southwest Airlines Co. (NYSE:LUV - Get Free Report)'s stock price gapped up prior to trading on Friday . The stock had previously closed at $40.63, but opened at $43.34. Southwest Airlines shares last traded at $44.39, with a volume of 1,569,519 shares traded.

Wall Street Analyst Weigh In

A number of equities research analysts have recently issued reports on the stock. Wells Fargo & Company cut their price objective on shares of Southwest Airlines from $50.00 to $44.00 and set an "equal weight" rating for the company in a research report on Monday, March 16th. BMO Capital Markets cut their price objective on shares of Southwest Airlines from $57.50 to $45.00 and set an "outperform" rating for the company in a research report on Tuesday, March 31st. Morgan Stanley boosted their price objective on shares of Southwest Airlines from $50.00 to $55.00 and gave the company an "overweight" rating in a research report on Friday, January 30th. Zacks Research downgraded shares of Southwest Airlines from a "strong-buy" rating to a "hold" rating in a research report on Wednesday, March 11th. Finally, TD Cowen cut their price objective on shares of Southwest Airlines from $56.00 to $46.00 and set a "buy" rating for the company in a research report on Thursday, April 2nd. Eight research analysts have rated the stock with a Buy rating, eight have issued a Hold rating and four have assigned a Sell rating to the company's stock. Based on data from MarketBeat, the stock currently has a consensus rating of "Hold" and a consensus price target of $43.72.

Southwest Airlines Stock Performance

The stock has a market cap of $21.28 billion, a P/E ratio of 51.65, a P/E/G ratio of 0.47 and a beta of 1.19. The company has a debt-to-equity ratio of 0.57, a quick ratio of 0.45 and a current ratio of 0.52. The business's 50-day moving average price is $44.18 and its 200-day moving average price is $39.86.

Southwest Airlines (NYSE:LUV - Get Free Report) last issued its earnings results on Wednesday, January 28th. The airline reported $0.58 earnings per share for the quarter, topping the consensus estimate of $0.56 by $0.02. The company had revenue of $7.44 billion during the quarter, compared to the consensus estimate of $7.51 billion. Southwest Airlines had a net margin of 1.57% and a return on equity of 6.18%. Southwest Airlines's quarterly revenue was up 7.4% compared to the same quarter last year. During the same quarter in the prior year, the firm posted $0.56 EPS. Southwest Airlines has set its FY 2026 guidance at 4.000- EPS and its Q1 2026 guidance at 0.450- EPS. As a group, sell-side analysts expect that Southwest Airlines Co. will post 1.55 earnings per share for the current fiscal year.

Southwest Airlines Dividend Announcement

The business also recently disclosed a quarterly dividend, which was paid on Thursday, April 2nd. Shareholders of record on Thursday, March 12th were issued a dividend of $0.18 per share. This represents a $0.72 annualized dividend and a dividend yield of 1.7%. The ex-dividend date of this dividend was Thursday, March 12th. Southwest Airlines's dividend payout ratio is 85.71%.

Institutional Inflows and Outflows

Several hedge funds and other institutional investors have recently made changes to their positions in the stock. AQR Capital Management LLC raised its position in shares of Southwest Airlines by 100.6% during the 1st quarter. AQR Capital Management LLC now owns 39,347 shares of the airline's stock valued at $1,303,000 after buying an additional 19,729 shares in the last quarter. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. raised its position in shares of Southwest Airlines by 5.4% during the 1st quarter. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. now owns 61,060 shares of the airline's stock valued at $2,050,000 after buying an additional 3,141 shares in the last quarter. Empowered Funds LLC raised its position in shares of Southwest Airlines by 7.6% during the 1st quarter. Empowered Funds LLC now owns 7,459 shares of the airline's stock valued at $250,000 after buying an additional 527 shares in the last quarter. EverSource Wealth Advisors LLC raised its position in shares of Southwest Airlines by 73.4% during the 2nd quarter. EverSource Wealth Advisors LLC now owns 5,690 shares of the airline's stock valued at $185,000 after buying an additional 2,408 shares in the last quarter. Finally, First Trust Advisors LP raised its position in shares of Southwest Airlines by 47.4% during the 2nd quarter. First Trust Advisors LP now owns 307,602 shares of the airline's stock valued at $9,979,000 after buying an additional 98,986 shares in the last quarter. Institutional investors own 80.82% of the company's stock.

About Southwest Airlines

Southwest Airlines Co is a U.S.-based low-cost carrier that operates a point-to-point domestic and near-international airline network. Headquartered in Dallas, Texas, the company primarily flies Boeing 737 aircraft and offers no-frills, single-class service designed to keep fares competitive. Southwest's operating model emphasizes high aircraft utilization, quick turnaround times and an open seating policy, allowing customers to board and select seats on a first-come, first-served basis.

Founded in 1967 by Herb Kelleher and Rollin King as Air Southwest Company, Southwest began commercial service in 1971, initially connecting Dallas, Houston and San Antonio.

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