Southwest Airlines (NYSE:LUV) Stock Price Expected to Rise, Bank of America Analyst Says

Key Points

• Bank of America raised its price target on Southwest from $28 to $37 but kept an underperform rating, with the $37 target implying roughly a 12.8% downside from the prior close.
• Analyst coverage is broadly neutral — five Buy, twelve Hold and four Sell — producing an average price target of $39.78 and an overall Hold consensus.
• Shares opened at $42.42 (market cap ~$21.9B) and trade at a high valuation (trailing P/E ~65.3); Southwest last reported (-$0.38) EPS and $6.17 billion in quarterly revenue.

Southwest Airlines (NYSE:LUV - Get Free Report) had its price target hoisted by equities researchers at Bank of America from $28.00 to $37.00 in a research report issued on Tuesday,Benzinga reports. The brokerage presently has an "underperform" rating on the airline's stock. Bank of America's price objective suggests a potential downside of 12.79% from the stock's previous close.

A number of other equities research analysts also recently weighed in on LUV. JPMorgan Chase & Co. lifted their target price on Southwest Airlines from $35.00 to $36.00 and gave the stock an "underweight" rating in a report on Friday, October 24th. Jefferies Financial Group lifted their price objective on shares of Southwest Airlines from $33.00 to $34.00 and gave the company a "hold" rating in a research note on Tuesday, December 2nd. Sanford C. Bernstein increased their target price on shares of Southwest Airlines from $31.00 to $34.00 and gave the stock a "market perform" rating in a research note on Thursday, November 20th. Weiss Ratings restated a "hold (c)" rating on shares of Southwest Airlines in a report on Monday, December 29th. Finally, Susquehanna upped their price objective on shares of Southwest Airlines from $30.00 to $35.00 and gave the company a "neutral" rating in a report on Friday, October 3rd. Five equities research analysts have rated the stock with a Buy rating, twelve have given a Hold rating and four have issued a Sell rating to the company. According to MarketBeat.com, the stock presently has an average rating of "Hold" and an average price target of $39.78.

Southwest Airlines Price Performance

Shares of NYSE LUV opened at $42.42 on Tuesday. The company has a market capitalization of $21.94 billion, a PE ratio of 65.27, a P/E/G ratio of 0.26 and a beta of 1.16. The company has a quick ratio of 0.42, a current ratio of 0.49 and a debt-to-equity ratio of 0.52. Southwest Airlines has a twelve month low of $23.82 and a twelve month high of $43.54. The firm has a fifty day simple moving average of $36.32 and a 200 day simple moving average of $33.95.

Southwest Airlines (NYSE:LUV - Get Free Report) last issued its quarterly earnings results on Tuesday, February 6th. The airline reported ($0.38) EPS for the quarter. Southwest Airlines had a net margin of 1.38% and a return on equity of 6.39%. The firm had revenue of $6.17 billion for the quarter. On average, sell-side analysts forecast that Southwest Airlines will post 1.55 EPS for the current year.

Hedge Funds Weigh In On Southwest Airlines

A number of hedge funds have recently added to or reduced their stakes in LUV. GK Wealth Management LLC purchased a new stake in shares of Southwest Airlines in the fourth quarter worth approximately $216,000. GAMMA Investing LLC grew its holdings in Southwest Airlines by 4.9% during the fourth quarter. GAMMA Investing LLC now owns 14,985 shares of the airline's stock worth $619,000 after buying an additional 700 shares in the last quarter. Triumph Capital Management bought a new stake in Southwest Airlines during the third quarter worth $169,000. Hudson Bay Capital Management LP bought a new position in Southwest Airlines during the 3rd quarter valued at $757,000. Finally, Groupama Asset Managment bought a new position in Southwest Airlines during the 3rd quarter valued at $484,000. Institutional investors and hedge funds own 80.82% of the company's stock.

Southwest Airlines Company Profile

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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