UBS Cuts Southwest Price Target 19% to $59 Citing $3 Jet Fuel Outlook
UBS cut Southwest Airlines’ price target by 19% to $59, forecasting $3-per-gallon jet fuel in H2 2026 and fuel pass-through rates of 30%-50%. The analyst warned airlines will likely suspend full-year 2026 guidance and highlighted share declines similar to the 2022 fuel-surge downturn.
1. UBS Cuts Price Targets for Major Carriers
UBS lowered its price targets across U.S. airlines, reducing Southwest Airlines’ target from $73 to $59 and similar cuts for Delta, United, American, and Alaska. The revisions reflect concerns over fuel cost volatility and its impact on sector profitability.
2. Fuel Cost Outlook and Risks
Analysts now assume $3-per-gallon jet fuel in the second half of 2026 with pass-through rates of 30% to 50%. A prolonged geopolitical conflict could drive fuel costs even higher, inflating operating expenses and potentially curbing consumer travel demand.
3. Impact on Southwest Airlines
Southwest’s share price has declined by mid-20% since late February, mirroring sector weakness. With full-year 2026 guidance likely suspended, investors face increased uncertainty on revenue and margin forecasts as fuel price swings drive financial planning.