: Southwest’s schedule changes will take a while to benefit airline, Raymond James analyst says in stock rating downgrade

Southwest Airlines Co.’s LUV move to change its flight schedule to reflect post-pandemic changes in air travel is “right,” but the benefits won’t be felt for another six months or so, Raymond James analyst Savathi Syth said in a note Friday. Syth downgraded her rating on Southwest’s stock to “outperform,” from “strong buy.” Expectations of a return to 2019-level of profitability are pushed back to 2025, from 2024, “until we gain greater conviction in the effectiveness of various initiatives,” Syth said. “To be clear, we do not believe the Southwest model is broken, and we believe valuation should reflect its net cash position resulting in a balance sheet that is head and shoulders above most of the industry.” Southwest reported disappointing second-quarter earnings on Thursday, and the stock is looking at a 11% loss this week as investors grew concerned about lower revenue and higher costs. Southwest shares are down 1% so far this year, contrasting with gains of around 20% for the S&P 500 index SPX and of 17% for the U.S. Global Jets ETF JETS.

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