Southwest (LUV) Investor Day Takeaways - Jefferies

Jefferies analyst Sheila Kahyaoglu reiterated a Buy rating and $60.00 price target on Southwest (NYSE: LUV) after attending the company's Investor Day that confirmed better than expected near term demand. The analyst offered 5 key takeaways:

1) Seemingly massive cost miss long-term w/ implied LSD CASM-ex growth
2) Q4 revs tracking better on Thanksgiving and December demand, primarily on price and co-brand
3) 2022 ASMs -3% to +2%, below ests. at mdpt
4) LT target of MSD ASM growth
5) Capex spend of $5BB in 2022 assumes exercise of all options (114 total) w/ 2022 fleet of 814 at YE vs. Q1 guide of 727

The analyst stated "As part of its analyst day, LUV revised its Q4 guidance. This included operating revenue down 10 to 15% (vs. our est. of -20%), better than the previous guide of down 15 to 25%. The change is mostly on price and better demand coupled with the Chase co-brand agreement. The outlook for ASMs and Load Factor are unchanged. ASMs are expected to be down 8% vs. 2019 and compares to our est./cons. of down 8%/7%. LFs remain 80-85% (vs. our 82.2% est). Leisure was strong over Thanksgiving w/ bookings for Dec above expectations. Managed corporate is expected down 55-70% vs. 2019 in Dec. LUV now expects to be profitable in Q4 with a slightly lower fuel price ($2.15-$2.25) and an unchanged CASMex outlook vs. our est. Adj. NI margin of -6%."

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 $45.27 yesterday.

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