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Southwest Airlines (LUV) shares jumped following JPMorgan’s double upgrade, marking the stock as a strong performer in the airline sector. The carrier’s stock closed at $44.52, rising 3.73% on the day.

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Southwest Airlines Co., LUV 

This movement reflects renewed optimism about the airline’s 2026 financial outlook and guidance approach.

JPMorgan elevated Southwest from Underweight to Overweight, signaling confidence in the airline’s earnings potential. The bank set a new price target of $60, up from the previous $36. Shares gained roughly 4% intraday after the announcement.

The upgrade came ahead of Southwest’s upcoming earnings report and guidance update scheduled for January 29. JPMorgan highlighted the airline’s simplified EPS framework as a key driver of renewed market credibility. Analysts note that the updated guidance model could reshape expectations for 2026 results.

JPMorgan Signals Strong EPS Potential

JPMorgan projects a potential $5 per share earnings guidance for Southwest in 2026. This figure significantly exceeds the current consensus of $2.98 and all individual forecasts. The bank views this outlook as transformative for both sentiment and valuation.

The firm emphasized that even a partial acceptance of guidance could lift shares above the $50 mark. Steady valuation assumptions support the potential for further gains. Investors responded positively, pushing the stock higher after the announcement.

Southwest’s EPS-focused framework aims to simplify communication and rebuild market trust. JPMorgan noted the airline’s historical guidance was uneven, prompting the updated approach. The streamlined system could strengthen credibility with stakeholders.

Price Target Revision Reflects Long-Term Upside

JPMorgan established a Street-high December 2026 price target of $60 for Southwest Airlines. The new target reflects the bank’s confidence in earnings potential and market reception. The upgrade reinforces the airline’s positive growth trajectory in the coming years.

The firm placed Southwest on its Positive Catalyst Watch, emphasizing upcoming earnings as a pivotal event. This recognition underlines expectations for guidance to influence near-term stock movement. Market attention is expected to focus on the clarity of EPS communication.

Southwest’s stock performance could benefit from continued adoption of simplified guidance and strong 2026 earnings. Analysts indicate that upward price pressure is likely if guidance meets or approaches JPMorgan’s projections. The combination of strategic clarity and potential earnings surprises positions the airline for notable gains.

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