Market Overview

Raymond James Raises Southwest Airlines Price Target, With Cost Concerns Dispelled

Raymond James Raises Southwest Airlines Price Target, With Cost Concerns Dispelled

Southwest Airlines Co (NYSE: LUV) reported better-than-expected Q4 results last week that were backed by its own revenue initiatives, and the airline has set aggressive targets for both revenue per available seat mile and cost capping, according to Raymond James.

The Analyst

Analyst Savanthi Syth maintains an Outperform rating on Southwest Airlines, while raising the price target from $60 to $64.

The Thesis

Southwest Airlines has capped its 2019 cost per available seat mile excluding fuel and profit sharing at 3-3.5 percent, Syth said in a Friday note.

The cost burden is likely to be in the first half of the year, given fleet underutilization arising from the termination of the Hawaii service, timing of deliveries and maintenance sequencing, the analyst said. 

Southwest Airlines guided to 4-5-percent year-on-year growth in RASM revenue per available seat mile for Q1, which beat even the more optimistic estimates.

The company will enjoy easy RASM comps in the first half of 2019, Syth said. Yet uncertainty around the Hawaii launch may impact Q2 revenues and costs, she said. 

Despite these short-term uncertainties, Southwest Airlines has the ability to maintain superior margins, FCFs and low leverage in the longer-term, the analyst said.

The company is also poised to benefit from “capitalizing on technology catch-up and international growth opportunities,” Syth said. 

Price Action

Southwest Airlines shares were trading up 1.13 percent at $55.60 at the time of publication Monday. 

Related Links:

Mid-Morning Market Update: Markets Mixed; Southwest Airlines Earnings Beat Expectations

62 Biggest Movers From Yesterday

Latest Ratings for LUV

Oct 2019MaintainsOverweight
Oct 2019MaintainsOverweight
Sep 2019Initiates Coverage OnHold

View More Analyst Ratings for LUV
View the Latest Analyst Ratings

Posted-In: Raymond James Savanthi SythAnalyst Color Price Target Travel Analyst Ratings General Best of Benzinga


Related Articles (LUV)

View Comments and Join the Discussion!

Latest Ratings

WENMorgan StanleyMaintains22.0
XGNCantor FitzgeraldInitiates Coverage On18.0
LOOPRoth CapitalInitiates Coverage On14.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

36 Stocks Moving In Monday's Mid-Day Session

Analyst: General Electric Just Took A 'Couple Of Steps Backward'