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Given his view of longer-lasting rebuild cost pressures and his opinion that Street expectations are "overly optimistic," he sees muted valuation upside.
As a response to insufficient staffing and recent operational challenges, Southwest is "logically" slowing its growth rate in Q4 and Q1, but ramping hiring while slowing growth and increasing capital intensity makes it tougher to argue for the stock as a standout versus better executing alternative airlines, Pfenningwerth noes.
Morgan Stanley analyst Ravi Shanker lowered the price target to $71 (an upside of 48%) from $76 and maintained an Overweight rating on the shares.
Price Action: LUV shares are trading lower by 1.95% at $47.71 on the last check Friday.
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