Southwest Airlines (LUV) Stock Drops as Jet Fuel Prices Hit 4-Year High

TLDR

• TD Cowen cut its price target on LUV from $56 to $46, while maintaining a Buy rating
• Goldman Sachs holds a Sell rating with a $30 price target, the most bearish on the Street
• Jet fuel prices have surged ~70% since the U.S.-Israel war with Iran began
• LUV was one of the worst-performing S&P 500 stocks on Thursday, falling 1.6%
• Analyst consensus sits at Hold with an average price target of $43.72

Southwest Airlines (LUV) dropped 1.6% on Thursday as rising jet fuel prices and a prolonged Iran war weighed on airline stocks across the board.

Southwest Airlines Co., LUV

President Trump’s speech Wednesday fell short of Wall Street’s hopes for a quick end to the conflict. Instead, his comments suggested the war could drag on, keeping fuel costs high for longer.

Jet fuel prices have climbed around 70% since the war with Iran began. The U.S. Gulf Coast Kerosene-Type Jet Fuel Spot price hit $4.344 per gallon on March 20 — its highest level since May 2022. Before the war, on Feb. 27, it stood at $2.428 per gallon.

TD Cowen analyst Tom Fitzgerald cut his price target on LUV from $56 to $46 on Thursday, though he kept a Buy rating. That new target still implies around 27.8% upside from Thursday’s price.

Fitzgerald said his team is “skeptical of the resiliency of travel demand” given the likelihood of higher energy prices and slowing credit card data. He lowered estimates across the six major U.S. airlines, noting fuel looks set to stay elevated for the rest of 2026.

LUV wasn’t alone. United Airlines fell 3% to $92.21, Delta dropped 1.2%, JetBlue slid 0.7%, and American Airlines lost 2.6%. The U.S. Global JETS ETF declined 1.4%.

TD Cowen flagged American Airlines, JetBlue, and Alaska Air Group as the carriers most exposed to fuel price risk, citing higher leverage and greater fuel sensitivity.

Analyst Targets Are Falling Fast

The broader analyst picture for LUV is mixed. Eight analysts rate it a Buy, eight a Hold, and four a Sell. The average price target sits at $43.72.

Goldman Sachs cut its target to $30 from $32 and kept a Sell rating. Bank of America lowered its target to $40 and held an Underperform rating. Wells Fargo trimmed to $44 with an Equal Weight. Raymond James cut to $45 from $55, and BMO dropped to $45 from $57.50.

On the more positive side, Barclays raised LUV to Overweight back in December with a $56 target. Jefferies nudged its target slightly higher to $42 and kept a Hold.

Earnings Miss on Revenue

LUV’s most recent quarterly earnings came in on January 28. The airline posted EPS of $0.58, beating the $0.56 consensus by $0.02.

Revenue came in at $7.44 billion, just below the $7.51 billion analysts had expected. That’s still a 7.4% rise year-over-year.

Southwest has guided for FY2026 EPS of $4.00 and Q1 2026 EPS of $0.45. The stock’s 52-week range runs from $23.82 to $55.11.

The stock’s 50-day moving average sits at $45.70, well above its current trading price of $37.61.

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