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SkyWest stock target raised, Buy rating reiterated on positive outlook

EditorNatashya Angelica
Published 06/04/2024, 11:16 PM

On Tuesday, TD Cowen showed confidence in SkyWest (NASDAQ:SKYW), increasing the stock's price target to $95 from the previous $85, while maintaining a Buy rating. The firm's stance comes as a positive outlook for the airline, which is seen as having successfully navigated the challenges of the pandemic period.

SkyWest is currently recognized by the firm as the leading regional airline in the United States. This acknowledgment is attributed to the company's continuous improvement in pilot staffing which has led to enhanced asset utilization and revenue generation. These improvements are crucial for the airline as it aims to maintain its industry position and ensure financial stability.

The firm also highlighted several factors that are anticipated to contribute to SkyWest's long-term profitability. Among these is the airline's operating leverage, which is expected to provide a tailwind to margins. Moreover, the increasing number of E175 aircraft that are projected to be fully paid off by 2026 will reduce capital expenditure requirements.

Furthermore, with the expectation of lighter capital expenditures (CAPEX) in the future, the firm anticipates an increase in SkyWest's free cash flow (FCF). This bolstered FCF is projected to support ongoing returns to shareholders, suggesting a healthy financial trajectory for the airline.

The maintained Buy rating by TD Cowen underlines the firm's belief in SkyWest's potential for continued success. The airline's strategic positioning and positive financial indicators provide a basis for the firm's optimistic outlook on the stock.

Switching gears, SkyWest Inc. has announced a strong start to 2024 with a net income of $60 million, or $1.45 per diluted share, in the first quarter. The company experienced a 5% increase in block hour production and expects a 7% to 9% increase in 2024 block hours and GAAP EPS in the high $6 range. SkyWest reported that it anticipates 2024 CapEx to be between $275 million and $325 million, including the acquisition of five new E175 aircraft.

These are some of the recent developments in the airline industry that investors should be aware of. As always, investors are advised to conduct their own due diligence before making any investment decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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