1. SkyWest, Inc. (NASDAQ:SKYW)
% of shares shorted: 3.79%
Number of Hedge Fund Holders: 28
The Best Airline Stock To Buy According To Short Sellers is SkyWest Inc. (NASDAQ:SKYW), which provides regional jet services for millions of travelers to over 200 destinations in North America via partnerships with major carriers and regional aircraft. SkyWest coordinates its operations through SkyWest Airlines and SkyWest Leasing and runs 1,800 flights per day with a fleet of more than 350 aircraft.
The Utah-based company operates through three segments: SkyWest Airlines, SkyWest Charter, and SkyWest Leasing. SkyWest Airlines is the primary business of the company.
After the pandemic, SkyWest Inc. (NASDAQ:SKYW) was the strongest American regional airline, with increased revenue and profit margins resulting from better asset utilization.
Moreover, it has a strong partnership model and adept handling of significant issues like labor shortages. The company’s competitiveness and prospective gains in market share in the regional market are strengthened by its capacity purchase agreements and strategic positioning.
Deutsche Bank’s Michael Linenberg has maintained a Buy rating on the American regional airline, with a $101.00 price objective. Linenberg’s confidence stems from SkyWest’s impressive Q2 results, where the airline beat analysts’ expectations with improved operating margins and an EPS of $1.82, exceeding the $1.70 target.
Better pilot availability and improved operational efficiency are made apparent by the company’s noteworthy block-hour production rise YoY. Additionally, revenue exceeded projections, highlighting SkyWest’s strong financial position and steady development trajectory.
Linenberg cites improved captain retention and anticipated increases in block hours by the company as signs of future income growth. This increase is expected to be facilitated by the improvement in captain attrition, which will allow the company to make better use of its fleet, particularly its E175 aircraft.
Although there has been a little adjustment to the EPS for 2025 due to expected increases in maintenance expenditures, Linenberg still sees these as strategic investments that should pay off in 2026. As per the analyst, the stock is more appealing as a long-term investment because of its present value ($76.29), which indicates tremendous upside potential.
Overall, SkyWest is a compelling investment opportunity due to its strong financial sheet, possible improvement in margin and free cash flow, and improved pilot staffing. The average 12-month price objective set by analysts for SkyWest stock is $76.67, indicating a 0.50% gain from the stock’s current price of $76.29.
Stephen White’s SW Investment Management is one of the most prominent shareholders in the company as of Q2, 2024, with 600,000 shares worth $49.24 million.
While we acknowledge the potential of SKYW, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SKYW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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