Finally, the analyst thinks SkyWest may not be done dealing yet. He theorizes that the company could take the roughly $675 million that will be left over after the XpressJets deal is done, and do some more shopping, maybe making a run at fellow regional Comair, which Delta has been looking to sell.

McAdoo also theorized SkyWest could ramp up its buyback program, or go after a private regional jet operator, among other options, before concluding: "In summary, SKYW is not appreciated as a profitable growth story in a shrinking industry."

SkyWest's second-quarter earnings of 33 cents a share fell short of Wall Street's consensus estimate for a profit of 38 cents a share when it reported on August 4. McAdoo's upgrade tilts analyst sentiment on the company in the positive direction for the first time in a while.

He previously was one of the three analysts with the equivalent of a hold rating on the stock among a total of five, according to Thomson Reuters. That status quo was in place for at least two months.

-- Written by Michael Baron in New York.

>To contact the writer of this article, click here: Michael Baron.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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