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Investing.com - Evercore ISI upgraded SkyWest (NASDAQ:SKYW) from In Line to Outperform on Tuesday, while raising its price target to $120.00 from $100.00. According to InvestingPro data, analysts maintain a strong buy consensus with price targets ranging from $100 to $127, suggesting further upside potential. The stock has already delivered an impressive 26% return over the past year.
The upgrade comes as the regional airline outsourcing provider continues to experience strong demand from legacy airline customers, according to Evercore ISI. The firm noted that SkyWest shares have de-rated by approximately half a price-to-earnings turn despite positive earnings revisions. With a current P/E ratio of 11.45 and robust revenue growth of 20.5% in the last twelve months, InvestingPro analysis indicates the stock is currently undervalued relative to its Fair Value.
Pilot production has been exceeding expectations due to lower attrition rates, addressing what had been a key constraint in the post-COVID recovery period. The company has also been finding creative growth opportunities for its existing fleet.
Legacy carriers are prioritizing the restoration of hub capacity and continue to rely on SkyWest given its demonstrated reliability over the past five years. A recent deal with Delta for 16 aircraft, announced in June as part of a larger 60-aircraft order, will allow SkyWest to replace wholly owned, fully depreciated aircraft.
The firm highlighted that SkyWest’s net debt and leverage are at their lowest levels in over a decade and continuing to decrease. Aircraft debt for a significant portion of the E175 fleet will be fully amortized in 2026, which Evercore ISI believes will provide more favorable free cash flow dynamics.
In other recent news, SkyWest Inc. reported impressive financial results for the first quarter of 2025, with earnings per share (EPS) of $2.42, surpassing analysts’ expectations of $2.06. The company achieved a revenue of $948 million, slightly above the forecast of $947.06 million, marking an 18% year-over-year increase. Additionally, SkyWest has placed a significant order with Embraer for 60 new aircraft, valued at $3.6 billion, with deliveries set to begin in 2027. This order strengthens SkyWest’s position as the largest E-Jet owner and operator globally. In a separate move, SkyWest announced plans to purchase and operate 16 new E175 aircraft for Delta Air, as part of a fleet modernization strategy. Raymond (NSE:RYMD) James reiterated its Outperform rating for SkyWest, citing the company’s fleet optimization efforts. Furthermore, SkyWest expanded its share buyback program by $250 million, bringing the total available for repurchase to approximately $272 million. These developments highlight SkyWest’s strategic focus on fleet expansion and shareholder value enhancement.
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