NEW YORK (TheStreet) -- Shares of the California-based airline Virgin America (VA) are up 3.16% to $36.94 in pre-market trading after Barclays initiated coverage on the company with an "overweight" rating and a price target of $42.

"VA is built for the premium and business travel segment, much like Ultra Low-Cost Carriers are now built from the ground up for leisure. VA is focused on a business customer base while maintaining a low-cost operation," Barclays said.

Analysts see 17% upside potential in VA, 82% if fuel stays low and has limited revenue implications.

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VA is among the most levered to fuel in Barclays' coverage, due to: limited hedging for 2015, longer-than-average stage length with a heavy domestic focus, and relatively low margins, analysts noted.

Investment risks include a relatively concentrated network, competition, and volatile fuel prices. As growth resumes, operational complexity could create execution problems, and new markets add financial risk. Unionization of labor could add cost pressures, they added.

VA Chart VA data by YCharts

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