Citi analyst Stephen Trent has maintained their bearish stance on LUV stock, giving a Sell rating on March 19.
Stephen Trent has given his Sell rating due to a combination of factors that raise concerns about Southwest Airlines’ future performance. Despite the airline’s efforts to reduce costs through strategic initiatives like cutting managerial headcount, there is uncertainty about whether its investments in technology will sufficiently address past operational issues. Moreover, the company’s projected improvements in earnings before interest and taxes (EBIT) seem overly optimistic, especially considering the potential for an atypical business cycle in 2025.
Another point of concern is the comparison to JetBlue’s past success, which was driven by unique strategies and favorable conditions like falling fuel prices. Southwest’s current strategies, such as not charging for checked bags, are not unique in the current market. Additionally, while Southwest’s revenue per available seat mile (RASM) guidance was less negative than some competitors, it remains to be seen how it will perform amidst consumer uncertainties and competition. The target price for Southwest’s stock has been adjusted to $30 per share, reflecting a cautious outlook and aligning with historical averages.
In another report released on March 19, Bank of America Securities also maintained a Sell rating on the stock with a $31.00 price target.
LUV’s price has also changed moderately for the past six months – from $29.530 to $33.930, which is a 14.90% increase.