Southwest Airlines (NYSE:LUV) shares are up 2% Tuesday after the stock was raised at Deutsche Bank.
Deutsche Bank raised LUV to Buy from Hold, raising the price target to $42 from $28 per share. Analysts at the firm said they believe 2024 will be the year when Southwest's network optimization initiatives start to kick-in and "provide a meaningful boost to top-line and bottom-line results."
"We think that a more optimized Southwest network could result in a more balanced pricing backdrop," they wrote. The firm believes this "could translate into strong unit revenue performance, especially during the back half of 2024."
Meanwhile, Bernstein upgraded LUV to Market Perform, raising the price target to $32 from $26 per share. Bernstein said the sentiment on domestic pricing limits the downside to estimates.
"We are upgrading Southwest to Market-Perform as conditions in the domestic market have improved and we no longer see sufficient downside to justify an Underperform rating," the firm wrote. "While we are removing the active rating, we continue to see more down than upside in the stock and believe the elevated valuation makes it vulnerable to any shift in sentiment on the domestic pricing environment."