Southwest's stock price at last check surged 9.7% to $36.03 on the heels of Credit Suisse's decision to boost its rating on the shares to outperform from neutral.
Analyst Jose Caiado also lifted his price target on Southwest to $45 a share from $35. That indicates a 37% premium over the stock's closing price on Thursday.
Southwest offers a way for investors to catch the tailwinds of an emerging rebound in leisure travel. And the Dallas airline also benefits from a "best-in-class balance sheet" that "positions LUV to stage an aggressive comeback," the Credit Suisse analyst wrote.
Southwest has managed to "retain its investment grade ratings through the worst of the crisis," Caiado wrote, while also noting the airline has built up a $13 billion war chest.
That is comparable to or better than its peers in the airline sector, even though Southwest is half their size, the Credit Suisse analyst wrote.
Southwest has also been effective in managing its debt, using money raised by a recent unsecured debt offering to pay down a credit line coming due in roughly a year in 2021, Caiado noted.
The airline's strong balance sheet, in turn, should enable Southwest to lead the industry's recovery over the next 18 months, which is expected to be marked by carriers engaging in fierce low-fare competition for passengers, the analyst observed.
Southwest Air's shares remain down 39% in 2020 through Thursday's close.