BofA downgrades Southwest to Neutral, says cost increases ‘hard to defend’

BofA downgraded Southwest to Neutral from Buy with a price target of $35, down from $45. Capacity continues to be added and is tracking in line with plan, but unit costs keep moving higher as well due to labor costs and likely continued investments, says the analyst, who calls the cost increases “hard to defend.” The firm lowered its 2023 and 2024 EPS forecasts as it rolls through the higher costs, the analyst noted.