Deutsche Bank Upgrades Southwest Airlines Stock to 'Buy'

Published 1 days agoLUV

Deutsche Bank Upgrades Southwest Airlines Stock to 'Buy'

Deutsche Bank has upgraded Southwest Airlines' stock rating from 'Hold' to 'Buy', with a new price target of $42, compared to the previous target of $28. This change comes in the wake of Southwest’s recent agreement with activist investor Elliott Investment Management, which is viewed as a significant step toward unlocking shareholder value.

Elliott Investment Management, which holds an 11% stake in Southwest, has been pushing for strategic changes within the airline. As part of the agreement, Southwest will undergo a board restructuring, adding six new directors—five nominated by Elliott and one independent member. This move aligns with Elliott's efforts to influence corporate governance and operational strategies to enhance value.

In addition to board changes, Southwest Airlines is planning leadership shifts and operational improvements. Executive Chairman Gary Kelly is set to retire earlier than expected in November 2024, paving the way for an independent chair. Furthermore, the airline will introduce new practices, such as assigned seating and premium offerings, aimed at boosting customer experience and competitive positioning.

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