UPDATE: Deutsche Bank Upgrades Southwest (LUV) to Buy

February 22, 2021 4:31 AM EST
Get Alerts LUV Hot Sheet
Price: $63.03 -0.32%

Rating Summary:
    23 Buy, 10 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 18 | Down: 8 | New: 31
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(Updated - February 22, 2021 6:12 AM EST)

Deutsche Bank analyst Michael Linenberg upgraded Southwest (NYSE: LUV) from Hold to Buy with a price target of $64.00 (from $50.00).

The analyst comments "We are raising our 12-month price target (PT) on LUV shares from $50 to $64 which is derived by applying a ~7 EV/EBITDAR multiple to our 2022 EBITDAR estimate and a ~6 EV/EBITDAR multiple to our 2023 EBITDAR estimate (which compares to the stock's historical trading range of 6x - 8x, although multiples can trade above the range during a recession/recovery period). The downside risk to our price target is if we fail to see a leveling-off in new COVID-19 cases. Fuel price volatility is also a key downside/upside risk: every 10% move in jet fuel impacts our 2021 EPS estimate by $0.40. Other downside risk factors are economic weakness, government regulation, taxation, airport constraints, safety concerns, the threat of terrorism and war, associated costs/risks with labor negotiations and the revaluation of the stock market resulting in a higher equity risk premium being applied to airline shares.both are at or below the lower end of the stock’s historical trading range, which we think is a reasonable application in light of the current challenging demand environment)."

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 $52.81 yesterday.


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