Dahlman Rose Initiates Hold Rating on Skywest Inc. (SKYW)

Dahlman Rose & Co. is out with a research report this morning, where it initiates a Hold rating on Skywest Inc. SKYW; it did not provide a price target. The Dahlman analysts said that the Utah based airline may get swept up in the wave of consolidation they are predicting in the regional airline space. They added that regional airlines are at an inflection point. The analysts added that SkyWest is in the process of acquiring ExpressJet Holdings, another regional airline, and will be the largest regional airline in the world, with 696 regional aircraft, and more than 4000 daily departures to 415 cities. The Dahlman analysts noted that Skywest has one of the better balance sheets in the space, with $13.15 per share of cash and book value of more than $24.42 per share. They believe that SKYW is ripe to continue growing through acquisitions. As for valuation, they remarked, “The company's market capitalization of about $764 million is just 23% of projected combined company 2011 revenue of $3.3 billion. At the same time, SkyWest is maintaining its commitment to continue to repurchase shares.”