On June 3, 2023, financial news outlets reported that Engine No. 1 LLC, a fund management firm, had purchased a new position in Southwest Airlines Co. (NYSE:LUV) in the fourth quarter of the previous year. According to its most recent Form 13F filing with the Securities & Exchange Commission, the institutional investor bought 6,533 shares of the airline’s stock at a value of approximately $220,000.
However, despite this investment news, several equity analysts recently lowered their ratings and price targets for LUV. Barclays downgraded from an “overweight” rating to an “equal weight” rating and decreased its price objective from $42.00 to $38.00. On the other hand, StockNews.com initiated coverage with a “hold” rating on May 18th. JPMorgan Chase & Co. also lowered Southwest Airlines’ rating from “overweight” to “neutral,” slashing its price objective from $64.00 to $39.00 just last month.
Melius reduced their target price on LUV from $44.71 to $39.00 and downgraded it from an “overweight” to a “neutral” rating as well in February 2023 while Redburn Partners also downgraded it from “buy’ to “neutral” with a target price of $40.
Such mixed messages might leave potential investors perplexed about whether or not they should invest in Southwest Airlines at this point in time since nine investment analysts have rated the stock as a hold while five have assigned it as a buy rating and one issued a strong buy rating for the company.
On Friday following these reports Southwest Airlines was trading at an opening of $29:12 on Friday which is quite low compared to its recent high of nearly fifty dollars ($44:91). It is worth noting that this airline faces fierce competition across multiple locations with customers being constant bargain hunters seeking affordable flights. The company must overcome rivals such as Delta, American and United to succeed in the industry.
It is still unclear how these ratings will affect Southwest Airlines’ shares in both the immediate and long-term future. Regardless of this fact, this event highlights how uncertain investing can be and how research-driven decision making is crucial especially when it comes to maneuvering financial markets.
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Hedge Funds and Institutional Investors Take Notice of Southwest Airlines Amid Recent Changes
Southwest Airlines, a major U.S. airline based in Dallas, Texas, has recently caught the attention of hedge funds and other institutional investors with several changes to their positions in the company. CoreCap Advisors LLC purchased a new stake in Southwest Airlines shares worth approximately $32,000 during the fourth quarter. Samalin Investment Counsel LLC raised its holdings by 247.5% during the first quarter to now own 702 shares of the airline’s stock worth $32,000 after acquiring an additional 500 shares in the last quarter. Among other hedge funds that also purchased stakes were First Community Trust NA and New England Capital Financial Advisors LLC worth $34,000 and $38,000 respectively. Byrne Asset Management LLC raised its holdings by 290.3% during the fourth quarter to own 1,288 shares of Southwest Airlines valued at $43,000 after acquiring an additional 958 shares in the last quarter. The majority of stocks amounting to 74.71% are owned by hedge funds and other institutional investors.
The EVP Ryan C.Green sold 4,936 shares of Southwest Airline’s business stock on May 2nd at an average price of $29.94 for a total transaction value of $147,783.84. Following this transaction, Ryan C.Green now directly holds 26,361 shares equating to a total valuation of $789,248.34.
Although several equity analysts had positive reviews on LUV (Southwest Airlines), recent reviews have been less optimistic with Barclays lowering their rating from “overweight” to “equal weight” and reducing their price target from $42 to $38 in March this year. Nine investment analysts have rated LUV as a hold whilst five have assigned it with buy ratings; Bloomberg reports that Southwest Airlines currently has a consensus rating of “hold” with an average price target estimate being set at around $44.71.
Southwest Airlines recently posted their quarterly earnings data on April 27th. The airline reported an EPS of ($0.27) for the quarter, which missed analysts’ consensus estimates of ($0.21) by $(0.06). Southwest Airlines had a net margin of 2.65% and a return on equity of 6.99%. The business earned $5.70 billion during that quarter, compared to the consensus estimate of $5.73 billion, with revenue for the same period in the previous year totalling at $4.71 billion.
Southwest Airlines has just announced their quarterly dividend offering with investors being paid a dividend of $0.18 per share on July 12th, assuming they are registered shareholders by June 21st, adding up to an annualized yield of 2.47%, with ex-dividend date set as Tuesday, June 20th.
As Southwest Airlines enters into an environment where competition is becoming increasingly fierce within its industry, it will be difficult to tell how well this major airline company can balance its cutthroat position amongst competitors whilst making sure it continues reaching growth targets year-on-year- It remains one to watch closely over the coming months and years in order to ascertain investors’ positions correctly accordingly.
