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Southwest Airlines' 1Q17 Earnings: High Costs Prevent Takeoff

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Part 8
Southwest Airlines' 1Q17 Earnings: High Costs Prevent Takeoff PART 8 OF 9

What Analysts Recommend for Southwest Airlines

Analyst recommendations

Out of the 17 analysts tracking Southwest Airlines (LUV), 35.3% of analysts have a “strong buy” rating on the stock, while another 35.3% have a “buy” rating. The remaining 29.4% have a “hold” rating.

What Analysts Recommend for Southwest Airlines

Interested in LUV? Don't miss the next report.

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Target price

The stock’s consensus 12-month target has risen to $63.7 as compared to $63 before the earnings were released and $55.2 at the end of 4Q16. The current target price indicates a 14.2% return potential compared to the April 27 closing price of $55.8. The highest target price for the stock is $58, and the lowest target price is $80.

So far, two analysts have raised their target prices for the stock since 1Q17 earnings. Cowen has an “outperform” rating and raised its target price to $62 from $58 earlier. Imperial Capital has raised its target price to $68 from $63 earlier.

Peer comparison

Analysts’ 12-month target prices for LUV’s peers are as follows:

  • Delta Air Lines (DAL): $61.3 with a 30.8% return potential
  • Alaska Airlines (ALK): $110.7 with a 22.3% return potential
  • United Airlines (UAL): $85.8 with a 20.5% return potential
  • American Airlines (AAL): $54.8 with a 17.9% return potential
  • Spirit Airlines (SAVE): $66.3 with a 15.0% return potential
  • JetBlue Airways (JBLU): $25.4 with a 13.0% return potential

Investors can gain exposure to Southwest Airlines by investing in the Dynamic Leisure & Entertainment Portfolio (PEJ), which holds 4.5% of its portfolio in the stock. Next, we’ll wrap up this series by looking at LUV’s valuation as compared to peers.

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