Imperial Capital Raises Price Target On Southwest Airlines

Bob McAdoo of Imperial Capital reiterated an Outperform rating on

on Wednesday with a price target raised to $48 from a previous $35. “Southwest should benefit from strong domestic industry trends, including lower fuel prices, as well as company specific catalysts including the recent expiration of Dallas Love Field restrictions resulting from the Wrong Amendment,” McAdoo wrote. The analyst adds that the airliner may now begin utilizing newer 737-800 aircrafts to grow capacity new markets including Alaska, Mexico and Canada after nearly three years of mostly flat capacity. With that in mind, McAdoo is now assuming the company will grow its average seat miles (ASMs) by 6 percent in 2015. McAdoo also notes that the company's balance sheet is strong, while its free cash flow should allow management to continue returning cash to shareholders in the form of dividends and share repurchases.