What happened

Shares of Mesa Air Group (NASDAQ:MESA) climbed more than 10% on Wednesday afternoon after the regional airline operator got a double upgrade from a Wall Street analyst. The company is weathering the pandemic well, and its recent earnings report appears to be making believers out of many on Wall Street.

So what

Airline stocks endured a miserable 2020 due to the pandemic, but Mesa is not a typical airline. The company operates small planes under contracts with larger partners. In Mesa's case, that means it flies primarily for American Airlines Group (NASDAQ: AAL), United Airlines Holdings (NASDAQ: UAL), and Deutsche Post (OTC: DPSGY) DHL. The fee-for-service model has helped insulate Mesa from some of the losses its larger partners have faced during the pandemic. Mesa last week surprised investors with a fiscal first-quarter profit that exceeded expectations, causing the stock to gain altitude.

View through the window at an airport lounge.

Image source: Getty Images.

Bank of America analyst Andrew Didora apparently liked what he saw from the company's report. On Wednesday, the analyst raised the stock to a buy rating from underperform and assigned a $15 price target to the shares, up from his previous $2 target.

Didora said Mesa is a "large beneficiary" of government support for the airline industry, and Mesa's long-term contracts with United and American position it well for a rebound.

Now what

Even with today's gains, Mesa still trades below $12, so there remains upside to Didora's price target. But Mesa has gained a lot in a short amount of time, up 200% in the last six months.

Its business model should do well in a recovery, but note that a recovery is expected to take time. Larger airlines have warned it could take until the second half of this decade before traffic fully recovers to pre-pandemic levels.

This is a solid company to hold on to through the recovery, but investors should be warned we are unlikely to see another 200% gain in the six months to come.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.