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Investing.com - TD Cowen has raised its price target on Southwest Airlines (NYSE:LUV) to $28.00 from $24.00 while maintaining a Hold rating on the stock. According to InvestingPro data, analyst targets for the airline range from $24.00 to $46.00, with the stock currently trading at $32.33.
The firm updated its estimates following Southwest’s third-quarter 2025 results, fourth-quarter 2025 guidance, and information about the airline’s outlook for 2026. The company has shown modest growth with revenue increasing 1.63% in the last twelve months to $27.47 billion, while maintaining profitability with a gross margin of 21.62%.
TD Cowen indicated that consensus estimates for fiscal years 2026 and 2027 appear reasonable, but expressed concerns about the company’s current initiatives, which it does not view as sufficient to close the product and margin gap with competitors. InvestingPro analysis shows Southwest remains a prominent player in the Passenger Airlines industry, with 10+ additional insights available to subscribers.
The research note mentioned that Southwest management has hinted at future announcements regarding airport lounges and new aircraft acquisitions, with TD Cowen acknowledging both are needed improvements.
TD Cowen cautioned that these initiatives will likely take multiple years to implement with delayed financial benefits, and predicted Southwest’s valuation multiple should compress toward the range typical of full-service carriers.
In other recent news, Southwest Airlines reported its third-quarter 2025 earnings, showing a mixed financial performance. The company achieved an earnings per share (EPS) of $0.11, which exceeded the anticipated loss of $0.04 per share. Despite this positive earnings surprise, Southwest Airlines’ revenue came in at $6.9 billion, falling short of the $6.92 billion forecast. This revenue miss has been a point of concern among investors. The earnings announcement has prompted reactions in the market, although specific stock price movements are not detailed here. These developments come amidst broader industry challenges and are likely to be closely watched by analysts and investors alike.
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