Deutsche Bank Downgrades Mesa Air To Hold After Q4 Results

Deutsche Bank analyst Michael Linenberg downgraded Mesa Air Group Inc MESA to Hold from Buy and lowered the price target to $7 (an upside of 20.7%), from $15.
Linenberg says the company faces higher than average cost pressures in two areas for at least the next two quarters: training/staffing due to increased turnover and elevated maintenance expense primarily due to more expensive spare part support driven by supply chain constraints.
As a result, he now expects Mesa to post quarterly losses for the next two quarters.
Raymond James analyst Savanthi Syth maintained an Outperform ratings on the shares and lowered the price target to $12.5 (an upside of 115.5%) from $13.
Recently, Mesa Air Group reported a Q4 net loss of $(7.5) million, or $(0.21) per share, compared to a net income of $11.4 million a year ago.
Q4 Revenue was $130.8 million (+21.1% year-over-year), reflecting an increase in block hour volumes for its major partners.
Operating income was $5.09 million (-78.7% Y/Y), and margin stood at 3.9% compared to 22.1% a year ago.
Adjusted EBITDA was $25.8 million, compared to $44.6 million in Q4 2020.
Q4 Block Hours were 94,868 (+64.6% Y/Y), Available Seat Miles increased 62.2% Y/Y, Passengers +97.4% Y/Y, and Total Completion Factor American 97.34% and United 98.06%.
Mesa ended the quarter at $120.5 million in unrestricted cash and equivalents and had $670.3 million in total debt secured primarily with aircraft and engines.
Mesa reported a total completion factor of 97.3% for American and 98.1% for United during 4Q21.
Price Action: MESA shares are trading lower by 17.9% at $5.82 during the market session on Friday.

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