Southwest price target raised to $31.50 from $28.25 at Citi

Citi analyst Stephen Trent raised the firm’s price target on Southwest (LUV) to $31.50 from $28.25 and keeps a Neutral rating on the shares as part of a Q3 earnings preview for the airlines. In light of the near-term “interplay” between airline supply and demand, the industry’s capacity growth moderation is probably not finished, the analyst tells investors in a research note. The firm says this moderation, continued positive demand and lower interest rates, point to a “good industry setup” into Q4, even though November’s elections, Mideast tensions and a port strike “could create some ripples in investor risk appetite.” Citi sees Buy-rated Delta (DAL) and United (UAL) with the most compelling setups into earnings. The firm cites stronger unit revenue and slightly lower Q3 fuel prices for the Southwest target increase.