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Raymond (NSE:RYMD) James reiterated its Outperform rating and $125.00 price target on SkyWest (NASDAQ:SKYW), representing significant upside from the current price of $96.99. According to InvestingPro data, analysts’ targets range from $100 to $127, with multiple analysts recently revising earnings estimates upward. The company’s stock has delivered an 18.44% return over the past year, despite showing some price volatility.
The regional airline will replace 11 CRJ-900s and 5 CRJ-700s currently operated for Delta with 16 new E-175 aircraft, with the fleet transition scheduled to begin in 2027 and likely continue through early 2028. The CRJ aircraft have been operating under short-term extensions, and this change is expected to provide SkyWest with higher-quality, longer-term contracts. The company’s financial health is rated as GOOD by InvestingPro, with impressive revenue growth of 20.53% in the last twelve months.
SkyWest has also expanded its E-175 purchase agreement with Embraer from 10 remaining aircraft to 60 total firm deliveries and 50 options. The 44 firm orders remaining after the Delta placement provide purchase positions spanning 2028-2032.
Raymond James noted these developments do not have near-term implications but demonstrate SkyWest’s ongoing efforts to create flexibility for optimizing its fleet mix and building future earnings streams. Trading at a P/E ratio of 10.77 and showing strong returns over the last five years, the company appears well-positioned for growth. The firm expects SkyWest to find other opportunities for the CRJ aircraft, such as placement in its Prorate operations or conversion of CRJ-700s to CRJ-550s for placement in capacity purchase agreements. For deeper insights into SkyWest’s valuation and growth prospects, access the comprehensive Pro Research Report available on InvestingPro.
The analyst pointed out that even in a worst-case scenario, with the CRJ aircraft fully paid off, there would only be modest carrying costs for SkyWest.
In other recent news, SkyWest Inc. reported impressive financial results for the first quarter of 2025, exceeding analyst expectations with an earnings per share (EPS) of $2.42 compared to the forecasted $2.06. The company also saw an 18% year-over-year increase in revenue, reaching $948 million. Additionally, SkyWest announced a significant expansion of its fleet, with a firm order for 60 Embraer aircraft valued at $3.6 billion, and plans to purchase 16 new E175 aircraft for its Delta Air operations, both set for delivery beginning in 2027. The company has secured positions for 44 additional E175s from 2028 to 2032, further solidifying its fleet modernization efforts. In terms of capital management, SkyWest increased its share buyback program by $250 million, bringing the total available repurchase amount to approximately $272 million. This move is part of the company’s strategy to manage capital and return value to shareholders. Meanwhile, SkyWest received tentative Department of Transportation approval for its charter service, marking a potential expansion in its service offerings. These developments reflect SkyWest’s ongoing efforts to strengthen its market position and expand its operational capabilities.
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