Key Takeaways
- TD Cowen slashed LUV price target from $56 down to $46, keeping a Buy recommendation
- Goldman Sachs maintains the Street’s most pessimistic stance with a Sell rating and $30 target
- Jet fuel costs have skyrocketed approximately 70% since the start of U.S.-Israel conflict with Iran
- Southwest ranked among Thursday’s worst S&P 500 performers, declining 1.6%
- Wall Street consensus stands at Hold with a $43.72 average target price
Shares of Southwest Airlines (LUV) slipped 1.6% during Thursday’s trading session as escalating jet fuel costs and ongoing Middle East tensions created headwinds for airline stocks industry-wide.
President Trump’s Wednesday address disappointed investors hoping for signals of an imminent resolution to the conflict. His remarks instead indicated a potentially extended military engagement, suggesting elevated fuel expenses could persist.
Jet fuel pricing has surged approximately 70% since the Iran conflict commenced. The U.S. Gulf Coast Kerosene-Type Jet Fuel Spot rate reached $4.344 per gallon on March 20 — marking the highest point since May 2022. Prior to the conflict’s start on February 27, pricing sat at $2.428 per gallon.
TD Cowen’s analyst Tom Fitzgerald reduced his LUV price objective from $56 to $46 Thursday while maintaining his Buy recommendation. The revised target still suggests potential upside of approximately 27.8% from Thursday’s closing level.
Fitzgerald expressed concerns about “the resiliency of travel demand” considering the probability of sustained elevated energy costs and weakening credit card spending trends. His firm lowered projections for all six major U.S. carriers, anticipating fuel prices will remain elevated through 2026.
The pressure extended beyond Southwest. United Airlines dropped 3% to $92.21, Delta decreased 1.2%, JetBlue declined 0.7%, and American Airlines retreated 2.6%. The U.S. Global JETS ETF fell 1.4%.
TD Cowen identified American Airlines, JetBlue, and Alaska Air Group as carriers facing the greatest vulnerability to fuel price volatility, pointing to elevated debt levels and increased sensitivity to fuel fluctuations.
Wall Street Targets See Widespread Reductions
Analyst sentiment on LUV remains divided. Eight analysts recommend Buy, eight suggest Hold, and four advise Sell. The consensus target price stands at $43.72.
Goldman Sachs reduced its price objective to $30 from $32 while maintaining its Sell rating. Bank of America lowered its target to $40 with an Underperform stance. Wells Fargo cut to $44 with Equal Weight. Raymond James reduced its target to $45 from $55, and BMO decreased to $45 from $57.50.
Among the optimistic voices, Barclays upgraded LUV to Overweight last December with a $56 price objective. Jefferies modestly increased its target to $42 while keeping a Hold rating.
Latest Quarterly Results Show Revenue Shortfall
Southwest released its most recent quarterly results on January 28. The carrier reported earnings per share of $0.58, exceeding the consensus estimate of $0.56 by $0.02.
Revenue totaled $7.44 billion, falling marginally short of the $7.51 billion analyst expectations. Despite the miss, this represented a 7.4% increase compared to the prior year period.
Southwest has provided guidance for fiscal year 2026 EPS of $4.00 and first quarter 2026 EPS of $0.45. The stock has traded between $23.82 and $55.11 over the past 52 weeks.
The stock’s 50-day moving average stands at $45.70, significantly above its current trading level of $37.61.
