Southwest (LUV) October Capacity Indicates Demand Weakening - Citi

Citi analyst Stephen Trent reiterated a Neutral rating and $36.00 price target on Southwest (NYSE: LUV) after the company guided October capacity to a decline of between 40% to 50% y-o-y. This implies softer than anticipated demand heading into Q4, despite the demand in Q3 appearing to have landed at or slightly above management’s prior expectations.

The analyst stated "Following management’s update, Citi trims its near-term EPS est. on softer pricing and weaker expected Q4 demand trends. In a post-COVID environment, Southwest’s low-cost model looks well positioned, as corporate travel may lag in its recovery. However, at current valuations (>17x consensus 2021 EPS est.), the shares look close to fair value, considering tepid demand trends. We maintain our Neutral rating and our PT at $36 (still using an ~11x forward earnings multiple)".

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 $35.60 yesterday.

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