Analysts’ bullish stance
With a market capitalization of ~$29 billion, Southwest Airlines (LUV) is the second-largest airline company in the United States. The stock could be an intriguing choice for investors. Analysts expect a double-digit surge in the company’s share price.
The analysts polled by Reuters have provided a consensus “buy” rating on Southwest Airlines. Approximately 55% of the analysts have provided a bullish recommendation on the airline. Six of the 22 analysts had a “strong buy” recommendation, six had a “buy” recommendation, eight had a “hold” recommendation, and two had a “sell” recommendation on the stock. Analysts’ target price of $59.50 represents a 13.5% increase from the current price of $52.41.
Southwest Airlines’ strong earnings results for the fourth quarter of 2018 have driven the bullish sentiment. The company’s adjusted EPS beat analysts’ estimates and marked a significant year-over-year improvement.
Going forward, analysts think that Southwest Airlines will continue to benefit from a healthy travel demand environment. The company’s cost-control measures and fleet transformation initiatives are expected to drive its bottom-line results. Analysts also expect lower fuel prices to help the company’s margins in upcoming quarters.
Peers’ ratings and target prices
Analysts appear to be bullish on the entire airline industry (IYT). Analysts provided a “buy” recommendation for most of Southwest Airlines’ peers. The one-year target prices for Delta Air Lines (DAL), United Airlines (UAL), American Airlines (AAL), and Spirit Airlines (SAVE) signify potential upsides of 18.5%, 28.4%, 37.6%, and 40.7%, respectively, from their current prices.