Key Highlights
- TD Cowen reduced LUV’s price target from $56 down to $46 but kept its Buy recommendation intact
- The most pessimistic forecast comes from Goldman Sachs with a Sell rating and $30 target
- Fuel costs for airlines have jumped approximately 70% following the escalation of the U.S.-Israel conflict with Iran
- Southwest Airlines ranked among Thursday’s poorest performers in the S&P 500, declining 1.6%
- Wall Street consensus stands at Hold with a mean price target of $43.72
Southwest Airlines (LUV) saw its shares retreat 1.6% during Thursday’s trading session as escalating jet fuel expenses and the continuing Iran conflict pressured airline sector equities broadly.
President Trump’s Wednesday address failed to meet investor expectations for a swift resolution to the military engagement. His remarks instead indicated the conflict might persist, sustaining elevated fuel expenses for an extended period.
Aviation fuel prices have increased roughly 70% since hostilities with Iran 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 outbreak on February 27, the price stood at $2.428 per gallon.
Tom Fitzgerald, an analyst at TD Cowen, lowered his LUV price objective from $56 to $46 on Thursday while maintaining his Buy recommendation. The revised target nevertheless suggests approximately 27.8% potential upside from Thursday’s closing price.
Fitzgerald expressed his team’s doubts regarding “the resiliency of travel demand” considering probable higher energy costs and weakening credit card spending trends. He revised downward his projections for all six major U.S. carriers, observing that fuel prices appear likely to remain elevated through the remainder of 2026.
Southwest wasn’t the only airline feeling the pressure. United Airlines dropped 3% to $92.21, Delta declined 1.2%, JetBlue retreated 0.7%, and American Airlines fell 2.6%. The U.S. Global JETS ETF posted a 1.4% decline.
TD Cowen identified American Airlines, JetBlue, and Alaska Air Group as the carriers with the greatest exposure to fuel price volatility, pointing to higher debt levels and increased sensitivity to fuel fluctuations.
Wall Street Revises Forecasts Downward
The overall analyst sentiment for LUV presents a divided outlook. Eight analysts recommend Buy, eight suggest Hold, and four advise Sell. The consensus price target stands at $43.72.
Goldman Sachs decreased its objective to $30 from $32 while maintaining its Sell recommendation. Bank of America adjusted its target to $40 with an Underperform rating. Wells Fargo lowered its forecast to $44 accompanied by an Equal Weight stance. Raymond James reduced its target to $45 from $55, and BMO decreased to $45 from $57.50.
Among the more optimistic assessments, Barclays upgraded LUV to Overweight in December with a $56 price objective. Jefferies slightly increased its target to $42 while retaining a Hold rating.
Recent Quarterly Results Show Mixed Performance
Southwest’s latest quarterly financial results were released 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 analyst expectations of $7.51 billion. However, this still represented a 7.4% increase compared to the prior year.
Southwest has issued guidance for FY2026 EPS of $4.00 and Q1 2026 EPS of $0.45. The stock’s 52-week trading range extends from $23.82 to $55.11.
The equity’s 50-day moving average rests at $45.70, significantly above its current market price of $37.61.
