Analysts Run Optimistic on This Airliner

Seaport Global Securities initiated coverage with a "buy" rating

Deputy Editor
Jun 17, 2020 at 11:00 AM
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The shares of Southwest Airlines Co (NYSE:LUV) are down 1.2% at $36.14 at last check, after announcing it will limit ticket sales to two-thirds capacity through Sept. 30, in order to keep middle seats empty in an effort to encourage social distancing. On a more positive note, Southwest's says it has "enough cash for two years" as demand steadily improves. Following the news, Seaport Global Securities initiated coverage with a "buy" rating and a price target of $44.

LUV has been climbing on the charts since its May 14, six-year bottom of $22.46, with two recent pullbacks caught by support at the ascending 20-day moving average. Now up 33% in the last monthly period, the equity is fighting to stay in the $36 region. 

Analysts are leaning bullish on Southwest stock coming into today, with 10 out of 16 sporting a "strong buy," and the remaining six at a lukewarm "hold" rating. Meanwhile, the 12-month consensus price target of $40.63 is a 12.3% premium to current levels. 

The options pits are of similar sentiment, with a very strong penchant for calls of late. LUV's 50-day call/put volume ratio of 3.06 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than all but 1% of readings from the past year. This suggests a very healthy appetite for long calls in the last 10 weeks. 

 

 

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