Evercore ISI Upgrades This Domestic Carrier, Calls It Margin Focused

Evercore ISI analyst Duane Pfenningwerth upgraded Southwest Airlines Co LUV to Outperform from In-Line with an unchanged price target of $48.
Pfenningwerth mentions that some of his recovery hopes have been delivered as leisure demand is recovering "vigorously" as the omicron panic has receded, but fuel prices in the triple digits per barrel merit the attention of network planners who consider variable cost/ incremental cash burn.
In that context, he finds it "interesting" that Southwest, which has "the strongest balance sheet" among the U.S. airlines, continues to meaningfully adjust plans into April and May.
He argues that these are not demand-driven adjustments and that Southwest appears margin-recovery focused and must be considering the volatile inputs, like fuel.
Pfenningwerth says his upgrade reflects the company's greater relative financial strength and margin-focused planning.
Price Action: LUV shares are trading higher by 0.16% at $42.37 on the last check Thursday.

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