Southwest Airlines (LUV) Stock Tumbles Amid Soaring Jet Fuel Costs and Iran Conflict

Key Highlights

• TD Cowen reduced LUV’s price target from $56 down to $46, keeping its Buy recommendation intact
• Goldman Sachs maintains the Street’s most pessimistic stance with a Sell rating and $30 target
• Jet fuel costs have jumped approximately 70% following the start of U.S.-Israel military operations against Iran
• LUV ranked among Thursday’s worst performers in the S&P 500, declining 1.6%
• Wall Street consensus stands at Hold with a mean price objective of $43.72

Shares of Southwest Airlines (LUV) declined 1.6% during Thursday’s trading session as escalating jet fuel expenses and ongoing Iran military operations pressured airline sector equities broadly.

Southwest Airlines Co., LUV

President Trump’s Wednesday address disappointed investors hoping for signals of an imminent conflict resolution. His remarks instead indicated the military engagement may continue, potentially sustaining elevated fuel expenses.

Jet fuel costs have rallied roughly 70% since military operations with Iran commenced. The U.S. Gulf Coast Kerosene-Type Jet Fuel Spot price reached $4.344 per gallon on March 20 — marking its highest point since May 2022. Prior to the conflict on Feb. 27, it traded at $2.428 per gallon.

TD Cowen’s Tom Fitzgerald reduced his LUV price objective from $56 to $46 on Thursday while preserving his Buy recommendation. The revised target still suggests approximately 27.8% potential upside from Thursday’s closing level.

Fitzgerald expressed his team’s “skepticism of the resiliency of travel demand” considering probable higher energy costs and weakening credit card spending trends. He revised downward his projections for all six major U.S. carriers, observing that fuel expenses appear poised to remain elevated through the remainder of 2026.

Southwest wasn’t the only carrier under pressure. United Airlines tumbled 3% to $92.21, Delta retreated 1.2%, JetBlue decreased 0.7%, and American Airlines shed 2.6%. The U.S. Global JETS ETF fell 1.4%.

TD Cowen identified American Airlines, JetBlue, and Alaska Air Group as the airlines most vulnerable to fuel price volatility, pointing to elevated leverage ratios and heightened fuel cost sensitivity.

Wall Street Price Targets Under Pressure

Current analyst sentiment on LUV remains divided. Eight analysts assign it a Buy recommendation, eight suggest Hold, and four recommend Sell. The consensus price target stands at $43.72.

Goldman Sachs lowered its objective to $30 from $32 while maintaining its Sell position. Bank of America reduced its target to $40 with an Underperform rating. Wells Fargo decreased to $44 with Equal Weight. Raymond James cut to $45 from $55, and BMO reduced to $45 from $57.50.

Among the optimists, Barclays upgraded LUV to Overweight in December with a $56 objective. Jefferies marginally increased its target to $42 while keeping a Hold stance.

Latest Quarterly Results Show Revenue Shortfall

Southwest’s latest quarterly report arrived on January 28. The carrier delivered EPS of $0.58, surpassing the $0.56 Street estimate by $0.02.

Revenue totaled $7.44 billion, narrowly missing the $7.51 billion analyst consensus. This nonetheless represented a 7.4% year-over-year increase.

Southwest has issued FY2026 EPS guidance of $4.00 and Q1 2026 EPS guidance of $0.45. The equity’s 52-week trading range spans from $23.82 to $55.11.

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

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