LUV Should I Buy
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Southwest Airlines Co (LUV) is a good buy for a beginner investor with a long-term strategy and $50,000-$100,000 available for investment. The company has demonstrated strong financial performance, positive momentum in its turnaround efforts, and promising initiatives like the Starlink partnership. Despite some hedge fund selling and neutral insider activity, the stock's technical indicators and analyst sentiment suggest potential for growth, making it a suitable long-term investment.
The stock is showing bullish momentum with SMA_5 > SMA_20 > SMA_200 and a positive MACD histogram of 0.301. RSI is neutral at 51.457, indicating no overbought or oversold conditions. The pre-market price of $50.83 is near the pivot level of $51.247, with key resistance at $54.073 and support at $48.42.
Strong Q4 financial performance with revenue up 7.39% YoY, net income up 23.75% YoY, and EPS up 51.22% YoY.
Positive analyst sentiment with multiple price target raises and upgrades, including BMO Capital's upgrade to Outperform with a $57.50 target.
Strategic partnership with SpaceX to introduce Starlink high-speed WiFi, enhancing customer experience and satisfaction.
Progress in turnaround initiatives like assigned seating and extra-legroom options.
Hedge funds are selling, with a 203.52% increase in selling activity over the last quarter.
Investigation by Halper Sadeh LLC into potential breaches of fiduciary duties, which could lead to corporate governance reforms.
Execution risk remains a concern as noted by analysts.
In Q4 2025, Southwest Airlines reported revenue of $7.442 billion, up 7.39% YoY. Net income increased to $323 million, up 23.75% YoY, while EPS rose to $0.62, a 51.22% YoY increase. Gross margin improved to 69.85%, up 1.59% YoY.
Analysts have raised price targets across the board, with targets ranging from $32 (Goldman Sachs) to $57.50 (BMO Capital). The consensus is neutral to slightly bullish, with firms acknowledging the company's progress in turnaround efforts and potential for earnings growth in 2026. Execution risk is noted but seen as manageable.
