UPDATE: JPMorgan Downgrades Southwest (LUV) to Neutral

(Updated - July 27, 2016 11:07 AM EDT)

JPMorgan downgraded Southwest (NYSE: LUV) from Overweight to Neutral with a price target of $34.00 (from $52.50). Analyst Jamie Baker noted that Southwest was playing little if any role in trying to solve for the industry’s domestic revenue challenges.

Baker explained, "Like JetBlue under prior management, Southwest continues to resist certain industry efforts aimed at improving revenue (i.e. bag fees and plain vanilla fare increases). Southwest also faces larger labor hurdles than any other U.S. operator, though timing and outcome are far from certain. Our below-consensus outlook assumes $550m of incremental wage pressure in 2017for all three unions, broadly in line what pilots alone are seeking, suggesting perhaps we are too generous. While shares were uniquely punished during earnings and are by no means grossly overpriced in our view, revenue lethargy and labor uncertainty suggests LUV shares may not participate as fully as others should industry self-help initiatives take root.Our rating slips to Neutral."

For an analyst ratings summary and ratings history on Southwest click here. For more ratings news on Southwest click here.

Shares of Southwest closed at $38.28 yesterday.

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