Southwest Airlines (NYSE:LUV) Stock Dropped to “Strong Sell” by Zacks Research

Zacks Research downgraded shares of Southwest Airlines (NYSE:LUV) from a hold rating to a strong sell rating in a research report released on Tuesday morning,Zacks reports.

Other equities research analysts have also recently issued research reports about the stock. Rothschild & Co Redburn raised shares of Southwest Airlines from a “sell” rating to a “neutral” rating and lifted their target price for the stock from $35.00 to $40.00 in a research note on Friday, September 18th. Wells Fargo & Company increased their price objective on shares of Southwest Airlines from $44.00 to $50.00 and gave the company an “equal weight” rating in a report on Tuesday, June 30th. Raymond James Financial lowered their target price on Southwest Airlines from $60.00 to $54.00 and set an “outperform” rating on the stock in a report on Monday, August 24th. Barclays cut their price target on Southwest Airlines from $65.00 to $58.00 and set an “overweight” rating for the company in a report on Friday, September 11th. Finally, Evercore upped their target price on Southwest Airlines from $44.00 to $52.00 in a report on Thursday, June 25th. Nine analysts have rated the stock with a Buy rating, nine have given a Hold rating and four have assigned a Sell rating to the company. According to MarketBeat.com, Southwest Airlines presently has a consensus rating of “Hold” and a consensus target price of $47.45.

Southwest Airlines Stock Down 1.6%

LUV opened at $41.77 on Tuesday. The company has a market cap of $20.43 billion, a PE ratio of 25.62, a price-to-earnings-growth ratio of 0.41 and a beta of 1.16. Southwest Airlines has a twelve month low of $29.26 and a twelve month high of $55.11. The company has a 50-day moving average price of $41.92 and a 200 day moving average price of $42.75. The company has a quick ratio of 0.42, a current ratio of 0.49 and a debt-to-equity ratio of 0.54.

Southwest Airlines (NYSE:LUV) last posted its quarterly earnings data on Wednesday, July 22nd. The airline reported $0.94 EPS for the quarter, topping the consensus estimate of $0.52 by $0.42. The company had revenue of $8.72 billion during the quarter, compared to analyst estimates of $8.58 billion. Southwest Airlines had a return on equity of 14.15% and a net margin of 2.78%.Southwest Airlines’s quarterly revenue was up 16.4% on a year-over-year basis. During the same period in the previous year, the business earned $0.43 EPS. Southwest Airlines has set its FY 2026 guidance at 3.250-4.250 EPS and its Q3 2026 guidance at 0.500-0.750 EPS. Sell-side analysts expect that Southwest Airlines will post 3.16 earnings per share for the current fiscal year.

Southwest Airlines Dividend Announcement

The business also recently declared a quarterly dividend, which was paid on Thursday, September 24th. Shareholders of record on Thursday, September 3rd were given a dividend of $0.18 per share. The ex-dividend date was Thursday, September 3rd. This represents a $0.72 dividend on an annualized basis and a dividend yield of 1.7%. Southwest Airlines’s dividend payout ratio (DPR) is currently 44.17%.

Hedge Funds Weigh In On Southwest Airlines

Hedge funds have recently made changes to their positions in the stock. QRG Capital Management Inc. lifted its stake in Southwest Airlines by 8.0% during the second quarter. QRG Capital Management Inc. now owns 35,341 shares of the airline’s stock worth $1,817,000 after purchasing an additional 2,632 shares in the last quarter. Envestnet Asset Management Inc. raised its holdings in shares of Southwest Airlines by 12.2% in the 2nd quarter. Envestnet Asset Management Inc. now owns 718,567 shares of the airline’s stock valued at $36,949,000 after buying an additional 77,989 shares during the period. WINTON GROUP Ltd lifted its stake in Southwest Airlines by 218.8% during the 2nd quarter. WINTON GROUP Ltd now owns 93,837 shares of the airline’s stock worth $4,825,000 after acquiring an additional 64,402 shares in the last quarter. Engineers Gate Manager LP grew its position in Southwest Airlines by 75.1% in the 2nd quarter. Engineers Gate Manager LP now owns 814,820 shares of the airline’s stock valued at $41,898,000 after acquiring an additional 349,394 shares in the last quarter. Finally, RFG Advisory LLC increased its stake in Southwest Airlines by 8.7% during the second quarter. RFG Advisory LLC now owns 22,992 shares of the airline’s stock worth $1,182,000 after purchasing an additional 1,836 shares during the period. Hedge funds and other institutional investors own 80.82% of the company’s stock.

Key Southwest Airlines News

Here are the key news stories impacting Southwest Airlines this week:

• Positive Sentiment: Southwest launched a first-of-its-kind U.S. airline plugin in ChatGPT, developed with OpenAI and Amazon Web Services. The tool lets travelers discover destinations, plan trips and shop for Southwest flights earlier in the booking process, potentially improving customer engagement and direct sales. Southwest Airlines launches first-of-its-kind U.S. airline plugin in ChatGPT
• Neutral Sentiment: Susquehanna lowered its Southwest price target from $50 to $45 and moved to a neutral rating. Although the revised target implies potential upside from the current trading level, the reduction signals more limited analyst confidence in the stock’s near-term appreciation.
• Neutral Sentiment: Citi assigned Southwest a hold rating, adding to a cautious analyst outlook rather than providing a catalyst for buyers. Southwest Airlines receives a hold from Citi
• Negative Sentiment: Bank of America Securities reaffirmed its sell rating on LUV, reinforcing concerns about Southwest’s earnings outlook and operating performance. Bank of America Securities reaffirms sell rating on Southwest Airlines
• Negative Sentiment: Southwest was added to the Zacks Rank #5 “Strong Sell” list, increasing the stock’s near-term technical and sentiment pressure. New Strong Sell Stocks for October 7th
• Negative Sentiment: Airline shares are facing broader short-selling pressure as higher oil and gasoline prices raise fuel-cost and consumer-demand concerns. Investors appear to be treating energy prices and ongoing geopolitical risks as threats to airline margins.

Southwest Airlines Company Profile

Southwest Airlines Co is a U.S. commercial airline headquartered in Dallas, Texas, and listed on the New York Stock Exchange under the symbol LUV. The company was founded in 1967 and began operating scheduled passenger service in 1971, initially serving cities in Texas before expanding across the United States.

Southwest primarily provides scheduled air transportation for passengers and also offers air cargo services. Its operations are centered on a large Boeing 737 fleet, supporting frequent service between major cities and regional airports.