Southwest Airlines (NYSE:LUV) Rating Increased to Outperform at BMO Capital Markets

Southwest Airlines (NYSE:LUV) was upgraded by equities researchers at BMO Capital Markets from a “market perform” rating to an “outperform” rating in a note issued to investors on Friday. The firm presently has a $57.50 target price on the airline’s stock. BMO Capital Markets’ price objective would suggest a potential upside of 18.71% from the company’s current price.

LUV has been the topic of a number of other research reports. The Goldman Sachs Group upped their price target on Southwest Airlines from $26.00 to $29.00 and gave the stock a “sell” rating in a report on Tuesday, January 13th. UBS Group raised their price target on Southwest Airlines from $43.00 to $45.00 and gave the company a “neutral” rating in a research report on Tuesday, January 6th. TD Cowen boosted their price objective on shares of Southwest Airlines from $31.00 to $42.00 and gave the stock a “hold” rating in a research report on Friday, December 12th. Morgan Stanley raised their target price on shares of Southwest Airlines from $48.00 to $50.00 and gave the company an “overweight” rating in a report on Thursday, January 8th. Finally, BNP Paribas Exane lifted their target price on shares of Southwest Airlines from $19.00 to $24.00 and gave the stock an “underperform” rating in a research report on Monday, December 8th. Seven investment analysts have rated the stock with a Buy rating, ten have assigned a Hold rating and four have given a Sell rating to the stock. Based on data from MarketBeat, the stock has an average rating of “Hold” and an average target price of $43.82.

Southwest Airlines Stock Up 18.5%

Southwest Airlines stock opened at $48.44 on Friday. The stock’s 50 day moving average price is $40.42 and its 200 day moving average price is $35.14. Southwest Airlines has a 1-year low of $23.82 and a 1-year high of $49.12. The company has a market cap of $25.05 billion, a PE ratio of 57.66, a price-to-earnings-growth ratio of 0.37 and a beta of 1.16. The company has a debt-to-equity ratio of 0.52, a current ratio of 0.49 and a quick ratio of 0.42.

Southwest Airlines (NYSE:LUV) last released its earnings results on Wednesday, January 28th. The airline reported $0.58 EPS for the quarter, beating analysts’ consensus estimates of $0.56 by $0.02. Southwest Airlines had a return on equity of 6.11% and a net margin of 1.57%.The company had revenue of $7.44 billion during the quarter, compared to the consensus estimate of $7.51 billion. During the same quarter last year, the company earned $0.56 earnings per share. Southwest Airlines’s quarterly revenue was up 7.4% compared to the same quarter last year. Southwest Airlines has set its FY 2026 guidance at 4.000- EPS and its Q1 2026 guidance at 0.450- EPS. On average, sell-side analysts predict that Southwest Airlines will post 1.55 EPS for the current fiscal year.

Hedge Funds Weigh In On Southwest Airlines

Several institutional investors and hedge funds have recently bought and sold shares of the stock. GHP Investment Advisors Inc. acquired a new stake in shares of Southwest Airlines during the 4th quarter worth $26,000. Optima Capital LLC acquired a new position in shares of Southwest Airlines in the 4th quarter valued at about $27,000. Lodestone Wealth Management LLC purchased a new stake in shares of Southwest Airlines during the 4th quarter worth about $29,000. Elevation Point Wealth Partners LLC purchased a new position in Southwest Airlines in the second quarter valued at approximately $25,000. Finally, Flagship Harbor Advisors LLC purchased a new stake in Southwest Airlines during the fourth quarter worth approximately $35,000. Institutional investors and hedge funds own 80.82% of the company’s stock.

Southwest Airlines News Summary

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

• Positive Sentiment: Company raised 2026 adjusted EPS guidance to at least $4.00 (more than 300% above 2025), signaling a large profit surge driven by new fees and pricing changes. PR News Release
• Positive Sentiment: Management ended open seating and introduced assigned seats plus new fees (e.g., seat selection, ancillary upsells). Analysts and investors view this as a structural revenue opportunity that prompted strong buying. CNBC: Forecasts profit surge
• Positive Sentiment: Q4 EPS beat consensus (reported $0.58 vs. ~$0.56 expected) and operating results showed profit improvement, supporting the credibility of management’s transformation. Yahoo Finance: Q4 Highlights
• Neutral Sentiment: Analysts remain mixed — some upgraded targets or reiterated conviction (JP Morgan Overweight; Evercore bumped target to $45 in‑line), but the median target is still below current levels, showing divergent views on valuation. Evercore ISI Price Target
• Neutral Sentiment: Investor commentary and transcripts highlight that the company’s transformation is underway (strong bookings, ancillary rollout); full realization depends on execution and demand durability. Earnings Call Transcript
• Negative Sentiment: Q4 revenue ($7.44B) missed consensus and some metrics (cash from operations, capex increase) show balance‑sheet pressure; revenue miss tempers the beat and raises execution risk. Zacks: Revenues Lag
• Negative Sentiment: Q1 2026 EPS guidance of ~$0.45 came in below the Street (~$0.57), creating a near‑term earnings gap that could produce volatility as investors re‑rate the timing of benefits. (Company press and market coverage document the Q1 guide.)
• Negative Sentiment: Unusual put‑option activity and commentary that shares may be “fully valued” suggest some traders are hedging or taking profits after the rapid run; that can amplify short‑term downside if sentiment shifts. Seeking Alpha: Valuation Caution

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.