Southwest downgraded to Underperform from Hold at Jefferies

Jefferies analyst Sheila Kahyaoglu downgraded Southwest to Underperform from Hold with a price target of $20, down from $28. The company’s Q1 revenue per available seat mile missed the lowered guide set just three weeks before quarter end, the analyst tells investors in a research note. As such, the firm no longer underwrites meaningful RASM growth for Southwest despite managemewbt continuing to believe revenues can grow high single digits. The airline is reviewing its go-forward strategy as optimization “seems to be failing,” contends Jefferies. It believes the stock’s 2.7% dividend yield is “vulnerable.”