UPDATE: Bank of America Raises PT on SkyWest Following Solid 2Q Results

In a report published Thursday, Bank of America analyst Glenn D. Engel reiterated an Underperform rating on SkyWest (NASDAQ: SKYW), and raised the price target from $9.00 to $10.50.

In the report, Bank of America noted, “SKYW reported 2Q of $0.38 vs. $0.33 a year ago, above our $0.30E and Street $0.34E, aided by lower costs, a positive engine mismatch, lower tax rate, and higher pro-rate profits. Margins rose 1pt yoy after stalling 1Q, but we see gains leveling off 2H13. We raise our 2013E to $1.05 (Street $1.25) from $1.00 given better 2Q results, but maintain 2014E of $1.15 (Street $1.47). SkyWest subsidiary posted a $40 mn pretax profit (8.6% margin), up $10.7 yoy, aided by $5.8 million swing in United engine expense revenue/expense timing mismatch and higher profits from at-risk flying. However, weather contributed to a doubling of ExpressJet subsidiary losses ($4.2 mn, or 1.1%) after totaling $25 mn in 1Q13 and $18.5mn in 2012. No clear path to ExpressJet profits exists yet.”

SkyWest closed on Wednesday at $15.30.