BMO Capital Markets Upgrades Southwest Airlines (NYSE:LUV) to Outperform

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

Several other analysts also recently weighed in on the company. Wall Street Zen upgraded Southwest Airlines from a “sell” rating to a “hold” rating in a research note on Saturday, October 25th. The Goldman Sachs Group raised their price objective on Southwest Airlines from $26.00 to $29.00 and gave the company a “sell” rating in a research note on Tuesday, January 13th. Sanford C. Bernstein upped their target price on Southwest Airlines from $31.00 to $34.00 and gave the company a “market perform” rating in a research report on Thursday, November 20th. Susquehanna raised their price target on shares of Southwest Airlines from $35.00 to $45.00 and gave the stock a “neutral” rating in a research report on Friday, January 9th. Finally, Deutsche Bank Aktiengesellschaft upped their price target on shares of Southwest Airlines from $40.00 to $48.00 and gave the company a “buy” rating in a report on Friday, December 12th. Seven equities research analysts have rated the stock with a Buy rating, ten have given a Hold rating and four have issued a Sell rating to the stock. According to data from MarketBeat.com, Southwest Airlines currently has a consensus rating of “Hold” and an average target price of $43.82.

Southwest Airlines Stock Performance

Shares of NYSE:LUV opened at $48.44 on Friday. The company has a market cap of $25.05 billion, a P/E ratio of 57.66, a PEG ratio of 0.37 and a beta of 1.16. Southwest Airlines has a one year low of $23.82 and a one year high of $49.12. The business’s 50-day simple moving average is $40.42 and its 200 day simple moving average is $35.14. The company has a debt-to-equity ratio of 0.52, a quick ratio of 0.42 and a current ratio of 0.49.

Southwest Airlines (NYSE:LUV) last posted its earnings results on Wednesday, January 28th. The airline reported $0.58 EPS for the quarter, topping analysts’ consensus estimates of $0.56 by $0.02. The business had revenue of $7.44 billion for the quarter, compared to analysts’ expectations of $7.51 billion. Southwest Airlines had a net margin of 1.57% and a return on equity of 6.11%. The business’s revenue for the quarter was up 7.4% compared to the same quarter last year. During the same period in the previous year, the company posted $0.56 earnings per share. 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 forecast that Southwest Airlines will post 1.55 earnings per share for the current fiscal year.

Institutional Inflows and Outflows

Institutional investors and hedge funds have recently bought and sold shares of the company. AQR Capital Management LLC raised its holdings in shares of Southwest Airlines by 100.6% during the first 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 during 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 worth $2,050,000 after buying an additional 3,141 shares in the last quarter. Empowered Funds LLC lifted its stake in shares of Southwest Airlines by 7.6% in the 1st quarter. Empowered Funds LLC now owns 7,459 shares of the airline’s stock worth $250,000 after acquiring an additional 527 shares during the period. Janney Montgomery Scott LLC raised its holdings in Southwest Airlines by 11.0% during the second quarter. Janney Montgomery Scott LLC now owns 11,498 shares of the airline’s stock worth $373,000 after purchasing an additional 1,136 shares in the last quarter. Finally, Mirae Asset Global Investments Co. Ltd. boosted its stake in Southwest Airlines by 3.0% during the 2nd quarter. Mirae Asset Global Investments Co. Ltd. now owns 65,558 shares of the airline’s stock valued at $2,127,000 after purchasing an additional 1,933 shares in the last quarter. Institutional investors own 80.82% of the company’s stock.

Southwest Airlines News Roundup

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.