Mesa Air Group Analyst Reveals Concern On Uncertainty About Normalized Earnings Potential
- Raymond James analyst Savanthi Syth reiterated an Underperform rating on the shares of Mesa Air Group Inc (NASDAQ: MESA).
- Mesa's 4Q22 adjusted EPS of $(0.37) was largely in line with the analyst's $(0.35) estimate.
- MESA shares surged ahead of and following its 4Q22 earnings release, including the firming of revised agreements with United Airlines Holdings, Inc. (NASDAQ: UAL) and creditors that provide sufficient liquidity until earnings can recover.
- Related: Mesa Air To End Regional Flights For American Airlines, Finalizing New Deal With United
- The analyst's concern remains the shrinking of the regional airline opportunity in the U.S. due to the doubling of regional pilot wages and, thus, uncertainty about the normalized earnings potential.
- The analyst added that elevated training expense is expected to continue, albeit with attrition stabilizing and additional simulator and training capacity coming on line in 2023.
- The analyst has cut FY23 EPS estimate from $(0.98) to $(1.47) primarily reflecting a higher loss during the transition period.
- Syth assumes halving of the pre-pandemic earnings power as the pilot supply situation normalizes, with an upside if United decides to reallocate flying to Mesa from other partners.
- Price Action: MESA shares are trading higher by 14.38% at $1.75 on the last check Tuesday.
- Photo Via Company
Latest Ratings for MESA
| Date | Firm | Action | From | To |
|---|---|---|---|---|
| Feb 2022 | Raymond James | Downgrades | Outperform | Market Perform |
| Jan 2022 | B of A Securities | Downgrades | Buy | Neutral |
| Dec 2021 | Raymond James | Maintains | Outperform |
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