Southwest Airlines Company (LUV) Raised to Buy at Zacks Investment Research

Zacks Investment Research upgraded shares of Southwest Airlines Company (NYSE:LUV) from a hold rating to a buy rating in a report issued on Tuesday, July 4th. The brokerage currently has $70.00 target price on the airline’s stock.

According to Zacks, “Shares of Southwest Airlines have performed well, outperforming the Zacks categorized Transportation-Airline industry in the last six months. Ushering in further good news, the company hiked its quarterly dividend payout by 25%. Its board also cleared a new buyback plan worth $2 billion. Furthermore, we are impressed by Southwest Airlines’ employee-friendly approach. The company has paid $586 million to its employees as part of its profit-sharing plan for 2016. The company’s second-quarter view on unit revenues also raises optimism. However, high costs are likely to continue hurting bottom-line growth.”

Several other research firms have also commented on LUV. Morgan Stanley reaffirmed an overweight rating on shares of Southwest Airlines in a research report on Friday, April 7th. Vetr raised Southwest Airlines from a hold rating to a buy rating and set a $64.21 target price on the stock in a report on Tuesday, June 27th. ValuEngine raised Southwest Airlines from a hold rating to a buy rating in a report on Friday, June 2nd. Bank of America Corporation boosted their target price on Southwest Airlines from $62.00 to $75.00 and gave the company a buy rating in a report on Friday, June 30th. Finally, Cowen and Company upped their price objective on Southwest Airlines from $58.00 to $62.00 and gave the stock an outperform rating in a report on Friday, April 28th. Six equities research analysts have rated the stock with a hold rating, twelve have assigned a buy rating and one has assigned a strong buy rating to the stock. The stock currently has a consensus rating of Buy and an average price target of $65.78.

Shares of Southwest Airlines (LUV) traded down 0.02% during trading on Tuesday, hitting $56.56. 5,798,715 shares of the stock were exchanged. The stock has a market cap of $34.16 billion, a PE ratio of 17.33 and a beta of 1.29. The firm has a 50 day moving average of $60.95 and a 200-day moving average of $56.90. Southwest Airlines has a 52-week low of $35.42 and a 52-week high of $64.39. Southwest Airlines also was the recipient of unusually large options trading on Thursday. Traders acquired 26,298 call options on the stock. This represents an increase of approximately 886% compared to the typical volume of 2,668 call options.

Southwest Airlines (NYSE:LUV) last posted its earnings results on Thursday, July 27th. The airline reported $1.24 earnings per share for the quarter, topping the consensus estimate of $1.20 by $0.04. The firm had revenue of $5.74 billion during the quarter, compared to analysts’ expectations of $5.73 billion. Southwest Airlines had a return on equity of 26.07% and a net margin of 9.63%. The firm’s revenue was up 6.7% compared to the same quarter last year. During the same quarter in the previous year, the business earned $1.19 earnings per share. Equities research analysts anticipate that Southwest Airlines will post $3.89 earnings per share for the current fiscal year.

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Southwest Airlines declared that its board has approved a share repurchase program on Wednesday, May 17th that permits the company to buyback $2.00 billion in outstanding shares. This buyback authorization permits the airline to buy up to 5.8% of its shares through open market purchases. Shares buyback programs are generally an indication that the company’s leadership believes its stock is undervalued.

In related news, EVP Robert E. Jordan sold 15,273 shares of Southwest Airlines stock in a transaction on Tuesday, May 23rd. The stock was sold at an average price of $59.72, for a total value of $912,103.56. Following the transaction, the executive vice president now directly owns 102,527 shares in the company, valued at approximately $6,122,912.44. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through this hyperlink. Also, EVP Jeff Lamb sold 19,800 shares of Southwest Airlines stock in a transaction on Thursday, May 25th. The stock was sold at an average price of $61.00, for a total value of $1,207,800.00. Following the completion of the transaction, the executive vice president now owns 92,468 shares in the company, valued at $5,640,548. The disclosure for this sale can be found here. In the last ninety days, insiders have sold 118,740 shares of company stock worth $6,923,568. 0.18% of the stock is currently owned by company insiders.

Several hedge funds have recently modified their holdings of LUV. National Pension Service acquired a new stake in shares of Southwest Airlines during the second quarter valued at approximately $141,000. Guardian Life Insurance Co. of America boosted its stake in Southwest Airlines by 0.6% in the first quarter. Guardian Life Insurance Co. of America now owns 2,374 shares of the airline’s stock worth $128,000 after buying an additional 15 shares during the last quarter. Van ECK Associates Corp boosted its stake in Southwest Airlines by 6.6% in the first quarter. Van ECK Associates Corp now owns 2,502 shares of the airline’s stock worth $135,000 after buying an additional 154 shares during the last quarter. Farmers & Merchants Investments Inc. boosted its stake in Southwest Airlines by 2.9% in the second quarter. Farmers & Merchants Investments Inc. now owns 2,632 shares of the airline’s stock worth $164,000 after buying an additional 75 shares during the last quarter. Finally, TrimTabs Asset Management LLC boosted its stake in Southwest Airlines by 88.9% in the first quarter. TrimTabs Asset Management LLC now owns 2,821 shares of the airline’s stock worth $152,000 after buying an additional 1,328 shares during the last quarter. 79.69% of the stock is owned by institutional investors and hedge funds.

Southwest Airlines Company Profile

Southwest Airlines Co (Southwest) operates Southwest Airlines, a passenger airline that provides scheduled air transportation in the United States and near-international markets. The Company provides point-to-point service. The Company offers ancillary service offerings, such as Southwest’s EarlyBird Check-In and transportation of pets and unaccompanied minors, in accordance with Southwest’s respective policies.

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