TD Cowen has raised its 12-month price target for Southwest Airlines to $50.00 from $42.00, while leaving its rating on the stock at Hold. The revised target sits close to Southwest's prevailing share price of $48.50, which is just under its reported 52-week high of $49.12.
The firm said the target increase reflects updated internal estimates following the airline's optimistic guidance for fiscal year 2026, as noted by the covering analyst. This sentiment appears to be echoed across the sell-side, with several analysts having recently increased their earnings forecasts for the company.
Supporters point to a constructive revenue outlook and potential upside into fiscal year 2027. They also highlight longer-term optionality tied to the airline's aircraft orderbook and possibilities to monetize that asset base over time.
At the same time, skeptics emphasize operational and revenue-mix uncertainties. They cite a fourth-quarter load factor that fell short of expectations and question the composition of Revenue per Available Seat Mile (RASM) gains - specifically how much of the improvement stems from loyalty revenue recognition changes versus ticket pricing or volume recovery.
TD Cowen's $50 target equates to roughly 9.4 times the firm's adjusted earnings-per-share estimate for 2027. That multiple is notably lower than the airline's current trailing P/E ratio of 51.72. The stock has nonetheless seen significant appreciation recently, with a roughly 59.51% price increase over the past six months.
The company reported fourth-quarter 2025 results that contained mixed elements: earnings per share of $0.58, a penny above the consensus expectation of $0.57, while revenue came in at $7.4 billion versus an anticipated $7.5 billion. Despite the top-line shortfall, the shares jumped in premarket trading, reflecting investor focus on forward guidance and recent operational accomplishments.
Adding to the market narrative, another research shop upgraded the stock from Market Perform to Outperform and raised its own price target from $43.00 to $57.50, citing confidence in the airline's ongoing initiatives and their potential to drive earnings momentum.
Southwest is included among a broad universe of U.S. equities covered by a comprehensive research platform that offers additional data such as fair value estimates and financial health metrics.
What this means for markets and sectors
- Airline equities continue to trade on a balance of near-term operational execution and longer-term capacity and fleet decisions.
- Investor sentiment is sensitive to RASM composition, which has implications for revenue recognition, loyalty programs, and ticketing dynamics.
- Analyst actions - upgrades, target revisions and consensus earnings changes - are actively reshaping expectations for travel and transportation sector participants.
Bottom line
The move by TD Cowen to increase its price target reflects a more favorable forward outlook driven by management guidance and updated modeling, but the Hold rating signals that the firm still sees balanced upside versus near-term risks. Mixed fourth-quarter results and differing analyst views have left the stock trading at levels that incorporate both optimism about future performance and questions about how recent revenue gains were achieved.