Citing pressure from its performance under its United Express contract, Calyon Securities lowered Mesa’s rating to neutral. Calyon Analyst Ray Niedl, in reducing it from Add, also cited higher maintenance costs on “a generally older fleet.” He noted that the cancellations that put the contract performance in jeopardy are beyond Mesa’s control but are still raising its costs.
“We believe that the stock price will be supported by the company as its strong cash flow will continue to be used to buy back stock at what management considers to be a low price in relation to what they believe are its long-term prospects such as the Hawaiian operation and the Chinese partnership,” said Niedl. “However, we see no immediate action that would trigger a major move upward for the stock price.”