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Feb. 17, 2021, 11:44 a.m. EST

Mesa Air stock soars to pre-COVID highs after BofA double upgrade to buy

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Tomi Kilgore

Shares of Mesa Air Group Inc. soared to pre-COVID highs, after BofA Securities analyst Andrew Didora swung to bullish from bearish, saying the regional air carrier is well positioned to capitalize on the return to travel.

The stock /zigman2/quotes/201991362/composite MESA -0.08% ran up 8.1% in midday trading, and has now jumped 54.0% over the past week. The stock has rocketed more than fivefold (up 438%) from its post-COVID closing low of $2.13 on April 3, to trade at the highest levels seen since December 2018, which was a year before the virus outbreak was believed to have started .

The stock’s rally Wednesday comes while the U.S. Global Jets exchange-traded fund /zigman2/quotes/207744796/composite JETS -0.53% edged up 0.3% while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.36% fell 0.6%.

Didora raised his rating on Mesa by two notches to buy from underperform, while boosting his stock price target more than sevenfold to $15 from $2.

He said Mesa is a “large beneficiary” of the U.S. government’s support of the airline industry, as it received more than $140 million in grant funds and a $195 million load to refinance higher debt costs.

And with long-term contracts at larger carriers United Airlines Holdings Inc. /zigman2/quotes/205037281/composite UAL -0.45% and American Airlines Group Inc. /zigman2/quotes/209207041/composite AAL -0.45% , “we believe Mesa is now well positioned to help its partners capitalize on a return to domestic travel, particularly as the network airlines should focus more on hub traffic,” Didora wrote in a note to clients.

Separately, Didora was also upbeat about Mesa’s recent partnership with United in placing a $1 billion order for all-electric vertical takeoff and landing aircraft (eVTOL) from Archer Aviation Inc.

Archer announced last week it was going public through a merger with special-purpose acquisition company Atlas Crest Investment Corp. /zigman2/quotes/223252119/composite ACIC -0.30% Mesa said at the time that it agreed to pay $5 million to buy 500,000 Atlas shares , and that it will receive a warrant exercisable to for 2.9 million Archer shares.

Atlas Crest’s stock surged 8.8% in midday trading.

Didora said that investment “gives Mesa equity exposure to a high-growth segment to balance out its more stable regional airline model.”

Mesa’s stock has more than doubled (up 127.8%) over the past three months, while the Jets ETF has advanced 15.1% and the S&P 500 has gained 8.3%.

/zigman2/quotes/201991362/composite
US : U.S.: Nasdaq
$ 12.10
-0.01 -0.08%
Volume: 541,843
April 16, 2021 4:00p
P/E Ratio
14.13
Dividend Yield
N/A
Market Cap
$430.73 million
Rev. per Employee
$170,334
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/zigman2/quotes/207744796/composite
US : U.S.: NYSE Arca
$ 26.44
-0.14 -0.53%
Volume: 4.13M
April 16, 2021 4:00p
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/zigman2/quotes/210599714/realtime
US : S&P US
4,185.47
+15.05 +0.36%
Volume: 2.21B
April 16, 2021 5:15p
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/zigman2/quotes/205037281/composite
US : U.S.: Nasdaq
$ 55.87
-0.25 -0.45%
Volume: 10.62M
April 16, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$18.16 billion
Rev. per Employee
$206,384
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/zigman2/quotes/209207041/composite
US : U.S.: Nasdaq
$ 22.03
-0.10 -0.45%
Volume: 25.96M
April 16, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$14.16 billion
Rev. per Employee
$168,812
loading...
/zigman2/quotes/223252119/composite
US : U.S.: NYSE
$ 9.92
-0.03 -0.30%
Volume: 1.84M
April 16, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$640.53 million
Rev. per Employee
N/A
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