JPMorgan elevated its rating on Southwest Airlines (LUV) from Neutral to Overweight, simultaneously boosting its December 2026 price target from $36 to $60. The firm’s analyst highlighted a significant probability that Southwest could guide to $5 in earnings per share for fiscal 2026, sharply higher than the current consensus of $2.98. Following the announcement, LUV shares jumped approximately 4% intraday, marking their highest level since 2022 and reversing a prolonged 2025 downturn driven by rising fuel costs and operational disruptions.

JPMorgan attributed its revised outlook to Southwest’s decision to streamline its guidance approach around EPS metrics, aiming to deliver clearer targets after a history of uneven projections. While acknowledging potential market skepticism toward a $5 EPS guide, the bank’s model shows that even a more conservative figure—combined with unchanged valuation assumptions—could propel the stock above $50 in the near term. This view underpins the firm’s conviction that Southwest can achieve a double-digit percentage gain from current levels.

To reinforce its bullish stance, JPMorgan placed Southwest on Positive Catalyst Watch ahead of the airline’s upcoming earnings release and 2026 guidance update scheduled for January 29. The bank’s updated financial model incorporates potential upside from fuel-hedging gains, continued unit revenue growth of 4–6%, and network optimization initiatives expected to improve unit costs by 1–2%. These drivers, if realized, would support the upgraded forecast and provide new catalysts for further share appreciation.