SkyWest Target Raised At Imperial From $16 To $18 Amid 'Meaningfully Better' Numbers

In a report issued Monday, Imperial Capital analysts Bob McAdoo and Scott Buck looked into SkyWest, Inc. SKYW after the company’s second-quarter financial results beat the Street’s estimates.

The analysts noted that, while progress is undeniable, near-term earnings upside seems to be mostly priced into the stock. They reiterate an In-Line rating, but boosted the price target from $16.00 to $18.00.

According to the report, the results and management commentary suggest meaningful progress in streamlining operations is being made. The analysts add that the company, much like its peers, continues to advance in the right direction to simplify its business and wind down “unprofitable or less profitable small jet flying. This streamlining of the business should also help drive further operational improvements and free up pilots to fly new, larger, and more profitable E175 aircraft."

The aforementioned changes in both the fleet and operations seem to be having a substantial impact on financial results. Thus, Imperial Capital also raised its 2015 estimates to reflect the ameliorating situation and prospects. They are now modeling adjusted operating income of $225 million for 2015, up from $68 million last year.

McAdoo and Buck notice, however, that, “while another step forward, the company still has work to do, especially on the ExpressJet side of the business which remains unprofitable,” but seems to be approaching profitability.

The analysts  also increased their 2015 EPS estimate to $1.82 from $1.50 and said they will keep an eye on additional signs of progress when the company reports its third-quarter results.