Southwest Airlines (LUV) and other airline stocks flew higher Tuesday as coronavirus lockdowns ease and promising vaccine news buoys markets.
Air travel ticked up during the Memorial Day weekend, according to Transportation Security Administration data, as states started lifting lockdowns and allowing more travel.
The Trump administration did put travel restrictions in place for flights from Brazil as Covid-19 cases rise and Brazil becomes the second-largest source of new cases worldwide. But the announcement wasn’t enough to temper market optimism about a new Covid-19 vaccine.
Novavax (NVAX) announced that it launched phase 1 clinical trials of another coronavirus vaccine candidate.
Southwest, Other Airline Stocks Jump
Southwest shares climbed 11.5% to 32.20 on the stock market today. Among other top airline stocks, United Airlines (UAL) soared 14% to 28.97. Delta Air Lines (DAL) rose 10.5% to 25.08. American Airlines (AAL) was up nearly 14% to 28.97.
Also Tuesday, UBS upgraded Southwest stock to buy from neutral and raised its price target to 41 from 37.
“Unlike many other airlines, the balance sheet position of LUV is remarkably clean (near-net cash balance sheet), which provides protection from any step backward in demand under another wave of COVID-19,” analyst Myles Walton wrote in the note.
“We believe that there is a risk that by getting specific federal assistance there will be a heightened regulatory risk on U.S. airline business models into 2021 and beyond; however, assuming regulations are evenly applied, LUV could be a net beneficiary on any ‘stress testing’ of financials.”
In April, Southwest said it reached a deal with the government to receive $3.2 billion as part of the $2 trillion CARES Act to help keep its employees on payroll.
There had been glimmers of hope before the Memorial Day weekend. Earlier this month, Southwest said new passenger flight bookings outpaced cancellations, giving it positive net bookings through May 18, a rebound from March and April.
This article was originally published on finance.yahoo.com/news/.
- On April 22, Join the Global Family to Stop Climate Change - April 19, 2021
- How Modern Agriculture is Benefiting Thousands of Americans - April 19, 2021
- How Reveal Laboratories is Responding to our Addiction Crisis - April 12, 2021