This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

SkyWest's Cash Prompts Upgrade

NEW YORK ( TheStreet) -- Shares of SkyWest (SKYW - Get Report) jumped Tuesday after Avondale Partners lifted its rating on the stock, giving the St. George, Utah-based company kudos for its cash holdings.

Also citing a bullish view of SkyWest's August deal to acquire ExpressJets Holdings (XJT), analyst Bob McAdoo lifted his rating on the stock to market outperform and boosted his 12-month price target to $16 from $14. McAdoo had been at market perform on the shares since February 2009.

The stock responded well, closing up 5.3%, or 64 cents, to $12.74. Volume of around 450,000 was slightly ahead of the issue's trailing three-month daily average of 433,000. Based on Monday's close at $12.10, the stock was down nearly 29% year-to-date, but it had bounced about 6% since scraping a 52-week low of $11.38 on July 7 prior to Tuesday's run-up.

McAdoo's upgrade looks mainly motivated by the aforementioned cash. He likes both how much SkyWest has -- around $750 million with the XpressJets' deal still pending completion -- and what the company is doing with it.

"SKYW has been using its cash to create growth in a generally shrinking industry," he told clients in a research note. "Excluding its surplus cash, SKYW's market cap is just over 2 times its earnings."

XpressJets has been a loss maker for the past three years and that isn't expected to change in calendar 2010, but McAdoo sees the deal for SkyWest, currently the biggest regional jet operator, to acquire its next largest rival as a relative bargain with numerous strategic benefits.

In particular, he thinks the combined company "will now own center stage" for regional jet operations for the combined entity resulting from the Continental (CAL - Get Report)- United (UAUA) hook-up that received antitrust clearance late last week.

Bringing Continental into the fold through the XpressJets' deal is big for SkyWest, as its results have been held back for the past two years by major partner Delta Airlines's (DAL - Get Report) flight reductions. Of the 452 aircraft in SkyWest's fleet as of June 30, a total of 244 were assigned to Delta, compared to 204 to United and the remaining four to AirTran Holdings (AAI).
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
DAL $43.86 0.37%
SKYW $16.14 2.80%
CAL $31.83 1.63%
AAPL $112.92 2.94%
FB $89.73 2.91%

Markets

Chart of I:DJI
DOW 16,654.77 +369.26 2.27%
S&P 500 1,987.66 +47.15 2.43%
NASDAQ 4,812.7080 +115.1720 2.45%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs