• Investing
  • Stock
  • Editor’s Pick
  • Economy
The Significant Deals
Stock

Citi rates Southwest stock sell, says earnings quality declining

by January 16, 2025
written by January 16, 2025

Investing.com — Citi downgraded Southwest Airlines (NYSE:LUV) Co. to “Sell” from “Neutral” on declining earnings quality and weaker cash flow conversion compared to pre-pandemic levels. The brokerage also reduced its price target to $29.50 from $31.50.

“As US network airlines enjoy positive earnings quality and FCF trajectories, these carriers have overtaken Southwest on these fronts,” analyst said.

“In spite of this shift, Southwest now trades at a bigger P/E premium to this group than it did pre-COVID.”  Southwest trades at a 135% premium to these peers, up from 50% pre-COVID.

Southwest’s pre-tax margins have fallen below those of domestic network peers like Delta and United, which benefit from premium cabin momentum and robust co-branded card revenues.

Citi noted that Southwest’s EBIT-to-FCF conversion has deteriorated, partly due to sale-leaseback activities and competitive pressures. The airline faces challenges penetrating the premium travel segment, which could limit growth.

While Citi acknowledged potential upside if Southwest improves its premium passenger base or offsets sector-wide cost pressures, it remains skeptical given current dynamics.

 

This post appeared first on investing.com
0 comment
0
FacebookTwitterPinterestEmail

previous post
Moody’s says LA fire may pose risk to Southern California Edison
next post
Philip Morris stock rises on FDA’s first nicotine pouch approval

You may also like

BASF results down on impairments, restructuring

January 27, 2025

European chipmakers slump as traders gauge DeepSeek AI...

January 27, 2025

Nasdaq futures tumble as China’s AI push rattles...

January 27, 2025

China Vanke’s CEO, chairman resign amid growing liquidity...

January 27, 2025

Fuji Media, rocked by sexual misconduct allegations, says...

January 27, 2025

Italy’s MPS shares fall ahead of Mediobanca board...

January 27, 2025

British Land stock drops following stake sale

January 27, 2025

UMG shares rally after new multi-year pact with...

January 27, 2025

BASF shares indicated 3% lower as impairments drag...

January 27, 2025

Ryanair cuts 2026 traffic forecast amid ongoing Boeing...

January 27, 2025
Fill Out & Get More Relevant News








    Stay ahead of the market and unlock exclusive trading insights & timely news. We value your privacy - your information is secure, and you can unsubscribe anytime. Gain an edge with hand-picked trading opportunities, stay informed with market-moving updates, and learn from expert tips & strategies.

    Recent Posts

    • Trump implies government could cut contracts and subsidies to Musk’s companies

      June 7, 2025
    • Procter & Gamble to cut 7,000 jobs as part of broader restructuring

      June 6, 2025
    • Shein and Temu see U.S. demand plunge as loophole for cheap goods closes

      June 6, 2025
    • Shein and Temu see U.S. demand plunge as loophole for cheap goods closes

      June 5, 2025

    Categories

    • Economy (245)
    • Editor's Pick (3,646)
    • Investing (505)
    • Stock (6,426)

    Latest News

    • Trump implies government could cut contracts and subsidies to Musk’s companies
    • Procter & Gamble to cut 7,000 jobs as part of broader restructuring

    Popular News

    • Sierra Space CEO leaves as $5 billion company pushes to launch space plane
    • Brazil’s federal tax revenue posts double-digit growth in November

    About The Significant deals

    • Privacy Policy
    • Terms & Conditions

    Copyright © 2025 thesignificantdeals.com | All Rights Reserved

    The Significant Deals
    • Investing
    • Stock
    • Editor’s Pick
    • Economy