LUV Stock Has Best Day Ever In Its 50-Year History — Morgan Stanley Hears ‘Pre-Pandemic Southwest’ Again

• Southwest Airlines forecast fiscal 2026 adjusted profit per share of about $4, compared with Wall Street expectations of $3.45, according to data compiled by Fiscal AI.
• Morgan Stanley said that the market has noticed the changes at Southwest Airlines, but there is "a lot more" to come.
• Southwest Airlines’ shares have surged over 17% so far this year and are on course for their third straight year of gains.

Shares of Southwest Airlines surged nearly 19% on Thursday, marking the best day in the U.S. carrier’s 50-year lifetime as a publicly listed company, as a better-than-expected profit forecast for the new year and Wall Street cheer boosted investor sentiment.

Shares of the airline closed at $48.50, their highest since November 2021, after the company outlined efforts to shift its traditional methods and adopt new approaches to drive growth.

LUV’s stock has surged over 17% so far this year and is on course for its third straight year of gains, following a nearly 26% gain in 2025.

The Year Ahead

Southwest on Thursday forecast fiscal 2026 adjusted profit per share of about $4, above Wall Street expectations of $3.45, according to data compiled by Fiscal AI.

The U.S. carrier has been shifting away from its traditional model, implementing bag fees, assigning seats, and extending flight credit expiration. It has also launched free Wi-Fi for loyalty program members in partnership with T-Mobile and expanded its online presence through new partnerships with Expedia and Priceline.

Southwest expects first-quarter unit revenue to increase at least 9.5% and noted that assigned and extra-legroom seating became operational just two days ago. The airline sees earnings upside based on how booking behavior related to those initiatives unfolds.

Wall Street’s View

Morgan Stanley raised the firm's price target on Southwest to $55 from $50 and maintained an ‘Overweight’ rating, according to The Fly. The firm said the airline definitively shed the shackles of strategy and execution risk that have bedeviled the story for much of the post-pandemic era, sounding like the “pre-pandemic Southwest, the industry benchmark.” The firm added that the market has noticed the changes at Southwest Airlines, but there is "a lot more" to come.

Evercore ISI raised its price target on Southwest Airlines to $45 from $40 and kept ‘In Line’ rating, noting that the airline’s earnings slightly exceeded expectations and initial 2026 guidance is "promising," surpassing Street expectations.

What Is Retail Thinking?

Retail sentiment on Southwest Airlines dipped to ‘bearish’ from ‘extremely bullish’ a day ago, with message volumes at ‘extremely high’ levels, according to data from Stocktwits. In the last 24 hours, the retail message volumes on Stocktwits jumped 170%.

A user on Stocktwits noted that Southwest Airlines was 20% away from pre-COVID levels, which is achievable.

Shares of Southwest Airlines have gained nearly 58% in the last 12 months.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Also See: Why Did QNCX Stock Plummet Over 90% Today?

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