Deutsche Bank analyst Michael Linenberg downgraded Southwest (LUV) today to Hold from Buy on concerns that it will have trouble integrating Airtran, the company it bought earlier this year. Southwest plans to integrate Airtran’s routes next year.
“The key downside risk factor for LUV, in our view, is integration risk given that airline mergers are complex and time consuming as disparate technology systems, labor groups, cultures, fleets, and facilities are combined,” Linenberg writes.
He dropped his price target to $9 from $16. Southwest closed on Monday at $7.97, up 3.6%.
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