Southwest Air Upgraded To Buy At Argus, Shares Close Up Nearly 2%
On Tuesday, Argus Research upgraded shares of Southwest Airlines (NYSE: LUV) from Hold to Buy with a target of $28.
Analyst John Staszak's upgrade is based on “generally favorable economic conditions, positive fuel price trends, increased ancillary revenue, fleet upgrades, and soon-to-be launched international flights.”
Staszak raised the 2014 earnings per share estimate from $1.24 to $1.50, and established a 2015 EPS estimate of $1.80. The estimated five-year EPS growth rate remained at 13 percent.
Southwest has “achieved its goal of $400 million in net synergies” from the Airtran acquisition, said Staszak
To enhance ancillary revenue, “Southwest plans to sell select boarding positions, raise exiting fees, and avoid fare wars,” said the Argus analyst.
The stock finished higher by 1.73 percent to $22.90 in Tuesday's trading. The $28 price target represents 22 percent upside from current levels.
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