TD Cowen analyst Helane Becker upgraded the rating on SkyWest (SKYW – Research Report) to a Buy today, setting a price target of $68.00.
Helane Becker has given her Buy rating due to a combination of factors that signal an optimistic outlook for SkyWest. In her analysis, Becker notes the company’s strong performance in the fourth quarter of 2023, highlighted by reduced pilot attrition and increased block hour production. Furthermore, SkyWest’s strategic growth in charter revenue through its SkyWest Charters group and investment in Contour, which holds a promising interline agreement with American Airlines, also supports this positive assessment. Becker anticipates steady block hour production in the first quarter of 2024 and forecasts growth for the full year, which underpins her confidence in the stock’s potential.
Raising both the rating and the price target, Becker updates her financial model to reflect an improved growth rate expected in 2024. She estimates that SkyWest’s shares can achieve a valuation of approximately $66, based on a 5.6 times multiple of the projected 2025 enterprise value to earnings before interest, taxes, depreciation, amortization, and aircraft rent (EV/EBITDAR). The analyst also predicts a return to greater than $6 per share in earnings per share (EPS) this year, with a further acceleration in profitability in the subsequent years as the company benefits from reduced pilot turnover and engages in additional flying for its airline partners.
In another report released on February 2, Deutsche Bank also maintained a Buy rating on the stock with a $70.00 price target.
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SkyWest (SKYW) Company Description:
Sky West, Inc. is a holding company, which engages in the provision of scheduled passenger services in the United States of America, Canada, Mexico and the Caribbean. It operates through the following three segments: SkyWest Airlines and SkyWest Leasing. The SkyWest Airlines segment provides as well as Mexico and Canada. The SkyWest Leasing segment includes revenue attributed from ownership cost earned under the applicable cost and fixed-fee flying contracts. The company was founded in 1972 and is headquartered in St. George, UT.
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