Southwest Airlines: Shift in Investor Sentiment, Undervalued Stock with Upside Potential

Southwest Airlines' short interest declined slightly in July, indicating a change in investor sentiment. Analysts project an average price target of $31.03, with a high of $46.00 and a low of $19.00, suggesting diverse expectations for the airline's future performance. The company is rated as a "Hold" with a mixed outlook on price targets and is estimated to have a GF Value of $40.21, indicating potential upside of 27.65% from the current price level.

Southwest Airlines Co. (NYSE: LUV) has seen a shift in investor sentiment, as short interest declined slightly in July. This change reflects a potential reversal in market perception of the airline's prospects. Analysts project an average price target of $31.03, with a high of $46.00 and a low of $19.00, indicating diverse expectations for the company's future performance. Despite this mixed outlook, Southwest Airlines is currently rated as a "Hold" by analysts [1].

The company's recent earnings report showed that it missed analysts' consensus estimates of $0.51 per share, reporting $0.43 instead. Revenue was down 2.1% year-over-year at $7.24 billion, which also fell short of expectations. However, Southwest Airlines has authorized a $2 billion share repurchase program, suggesting management believes the stock is undervalued [1].

Southwest Airlines has also been actively investing in sustainable aviation fuel (SAF) technology. In March 2024, it acquired SAF production process developer SAFFiRE, which it sold to biofuel producer Conestoga Energy in August 2025. This sale comes as part of Southwest's broader strategy to reduce its carbon footprint [2].

Analysts estimate that Southwest Airlines has a GF Value of $40.21, indicating a potential upside of 27.65% from the current price level. This valuation suggests that investors may be underestimating the company's future prospects, particularly given its focus on sustainable aviation and cost-saving measures.

References:
[1] https://www.marketbeat.com/instant-alerts/southwest-airlines-co-nyseluv-receives-consensus-recommendation-of-reduce-from-analysts-2025-08-14/
[2] https://aviationweek.com/aerospace/emerging-technologies/southwest-airlines-sells-saf-developer-after-16-months