Investing.com -- In a note on Thursday, Goldman Sachs downgraded SkyWest to Neutral from Buy and cut its price target to $108 from $126, citing increased downside risk to block hour production and limited upside relative to the broader airline industry's improving backdrop.

Analyst Catherine O'Brien said SkyWest's business model, which generated 81% of its 2025 revenue through long-term capacity purchase agreements with partner airlines, "produces more durable results than the rest of our US Airlines coverage over the cycle, but offers significantly less upside to the improving competitive/fare environment."

Goldman reduced its 2026 block hour growth forecast to 3.0% from 3.5%, noting that partner airline capacity growth is expected to "remain lower than originally planned over the medium-term."

O'Brien stated that this represents "a significant deceleration from recent years," which had seen mid-teens growth as post-pandemic utilization ramped and the company took delivery of dual-class E175 aircraft.

The downgrade comes despite a broadly positive view on the airline industry. Goldman raised its third-quarter and fourth-quarter 2026 industry net income forecasts by 24% and 32%, respectively, citing stronger unit revenue trends and a significant decline in jet fuel prices.