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On Tuesday, Jefferies research firm maintained a positive outlook on FTAI Aviation (NASDAQ: FTAI) shares, reiterating a Buy rating with a price target of $188.00. The stock, which has delivered an impressive 176.4% return over the past year, currently trades around $126.51. According to InvestingPro data, analyst targets range from $132 to $300, reflecting strong growth expectations for this aviation services provider.
The firm's analyst highlighted FTAI Aviation's new Strategic Capital initiative in partnership with 3P private credit, which aims to invest $3-5 billion annually in acquiring mid-life Boeing (NYSE:BA) 737NG and Airbus A320ceo aircraft. This move is designed to tap into an unexplored market for Maintenance, Repair, and Overhaul (MRO) of aircraft currently on lease.
According to the analyst, the initiative could lead to the acquisition of over 200 aircraft, valued at $15 million each, and including 400 engines. With an estimated 20% of these aircraft requiring shop visits (SVs) each year and an average of two modules per SV, the potential incremental opportunity is projected to be over 150 modules per year. This could contribute more than $150 million in EBITDA annually, assuming each module generates approximately $1 million.
The analyst's forecast suggests that by 2025, FTAI Aviation's Asia-Pacific (AP) EBITDA could reach between $600-650 million. This projection stands 4% and 12% higher than Jefferies' own estimate and the consensus estimate of $603 million and $556 million, respectively. The company's current EBITDA stands at $723.03 million, with revenue growing at 36.77% year-over-year.
InvestingPro subscribers can access over 15 additional key insights and a comprehensive Pro Research Report that provides deep-dive analysis of FTAI's financial health and growth prospects. The initiative is expected to compound FTAI's growth, significantly impacting the company's earnings before interest, taxes, depreciation, and amortization.
FTAI Aviation's strategy is part of a broader trend in the aviation industry focusing on the MRO market for leased aircraft. The company's targeted investment into mid-life aircraft and the associated MRO services is an effort to meet the growing demand for such services in the aviation sector.
With a market capitalization of $12.97 billion and strong liquidity position, as evidenced by a current ratio of 3.86, FTAI appears well-positioned to execute its growth strategy.
In other recent news, FTAI Aviation has launched a $3 billion aircraft acquisition initiative, targeting the acquisition of on-lease 737NG and A320ceo aircraft. As part of this initiative, FTAI sold 46 on-lease narrowbody aircraft for an estimated net purchase price of $549 million. The company also provided financial guidance for fiscal year 2025, projecting an Adjusted EBITDA of approximately $1.1 to $1.15 billion.
RBC Capital Markets upgraded Hexcel (NYSE:HXL) Corporation and Raytheon Technologies (NYSE:RTX) Corp to 'Outperform' while downgrading General Dynamics Corp (NYSE:GD) and Vectrus Inc (NYSE:VVX) to 'Sector Perform'. Analyst firms BTIG, Deutsche Bank (ETR:DBKGn), and Stifel maintained their Buy ratings on Fortress Transportation (NASDAQ:FTAI), with BTIG raising its target price to $180.
FTAI Aviation reported substantial growth in Q3 2024, with adjusted EBITDA reaching $232 million, a 50% increase from the same period last year. The company also sold its last two offshore energy vessels, Pioneer and Pride, for approximately $143 million.
In a joint venture with Chromalloy, Fortress Transportation received Federal Aviation Administration (FAA) approval for a key engine component, which could potentially double the company's EBITDA per engine module and reduce engine shop visit costs.
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