Raymond James upgrades SkyWest on demand recovery and valuation

Investing.com -- Raymond James has upgraded SkyWest from Outperform to Strong Buy, citing attractive valuation and strengthening demand trends across the U.S. airline industry.

In a research note, the firm said its decision followed “the recent pullback and based on our earnings and valuation checks.”

Analysts acknowledged ongoing uncertainties but noted that “while macro risks abound and short-term bookings remain sensitive to headlines, the demand recovery first seen at the beginning of 3Q25 has continued to build, having greater implications for 4Q25 due to the forward sale of tickets.”

Raymond James highlighted that the industry outlook remains supportive despite shifting capacity dynamics.

“While capacity growth is also stepping up in 4Q25, early indications are encouraging,” the analysts wrote, adding that developments at Spirit Airlines have helped stabilize the competitive landscape.

According to the note, “the recent Spirit lifeline seems to remove a faster right-sizing of mainline capacity in the next six months, but a shrinking Spirit, modest growth plans at most U.S. airlines, and cabin retrofit ambitions provide a favorable backdrop heading into 2026 as long as the demand recovery holds.”

The analysts said they continue to prefer carriers with unique earnings drivers and financial strength.

“We continue to favor stocks with idiosyncratic earnings drivers or strong margins and balance sheets to take advantage in industry dislocations,” Raymond James stated.

In the near term, the firm named SkyWest, alongside Allegiant (ALGT) and Alaska Airlines (ALK) as best positioned.

“We believe Strong Buy-rated SKYW and ALGT and Outperform-rated ALK are best positioned,” the note said, while cautioning that its 2025 EPS forecast for Alaska remains below the company’s prior guidance.

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