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Southwest Airlines: Analysts Have a Mixed View

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Analysts’ recommendations

Analysts have mixed opinions about Southwest Airlines (LUV) stock. The stock has received a consensus “buy” recommendation from the analysts polled by Reuters. Approximately 50% of the analysts have provided a bullish rating on the airline.

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Six of the 22 analysts recommended a “strong buy,” five recommended a “buy,” nine recommended a “hold,” and two recommended a “sell.” Analysts’ target price of $59.24 represents a 14% increase from the current price of $51.94.

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Most analysts think that the company’s downbeat first-quarter outlook provided on March 27 wasn’t worse than what they expected. Bloomberg Intelligence analyst George Ferguson said, “There’s a little bit of relief that it wasn’t worse.” He also said, “The market, after the beating the airlines have taken, says it isn’t terrible and maybe we’re getting some of the bad news out and are ready for better news.”

Southwest Airlines faced ~9,400 flight cancellations during the first quarter due to the government shutdown, bad weather, and Boeing’s 737 MAX problems. However, analysts don’t think that a similar kind of situation will happen again. Analysts are still bullish on the stock.

Peers’ rating

Analysts seem to be bullish on the entire airline industry (IYT). Analysts provided a “buy” rating for most of Southwest Airlines’ peers. The one-year target prices for Spirit Airlines (SAVE), American Airlines (AAL), United Airlines (UAL), and Delta Air Lines (DAL) signify potential upsides of 40.7%, 37.6%, 28.4%, and 18.5%, respectively, from their current prices.

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