On Thursday, Stifel analysts reiterated their Buy rating on FTAI Aviation (NASDAQ:FTAI) stock, with a price target of $167.00. The stock has experienced significant volatility recently, falling over 31% in the past week, though it maintains an impressive 144% gain over the last year, according to InvestingPro data.
The firm addressed a recent short report by Muddy Waters (NYSE:WAT), which accused FTAI Aviation of financial manipulation to inflate aerospace adjusted EBITDA and margins. The short seller’s report alleged that "80% of FTAI’s Aerospace Products adjusted EBITDA is gains on sale."
Stifel’s analyst countered the claim, suggesting that the sale of whole engines in the segment accounts for approximately 20% of adjusted EBITDA, not the 80% claimed by Muddy Waters. According to Stifel’s analysis, if Muddy Waters’ assertion were accurate, it would imply a valuation impact of around $35 per share. However, Stifel’s estimate of the 20% contribution would only equate to a $10 per share impact.
The firm anticipates a detailed response from FTAI Aviation’s management, clarifying the actual number of modules sold that were whole engines. Stifel posits that if the number is indeed below 20%, the company’s stock stands to benefit from several positive factors.
Currently trading at an EV/EBITDA multiple of 20.8x, the company maintains a GOOD financial health score according to InvestingPro’s comprehensive analysis. These include the PMA (Parts Manufacturer Approval), Strategic Capital Initiative, the long cycle stemming from weak deliveries by Boeing (NYSE:BA) and Airbus, and the ability to meet EBITDA targets.
Despite the allegations from Muddy Waters, Stifel’s stance remains that the potential upside for FTAI Aviation outweighs the risks, suggesting that investors consider purchasing shares during any price dips resulting from the short report. With analyst targets ranging from $160 to $300, and 14+ additional key insights available on InvestingPro, investors can access comprehensive analysis to make informed decisions during this volatile period.
In other recent news, FTAI Aviation has faced allegations from Muddy Waters Research, accusing the company of misleading financial reporting. The research firm claims that FTAI Aviation has been recording one-time engine sales as Maintenance Repair & Overhaul (MRO) revenue in its Aerospace Products segment. In contrast, Wolfe Research analysts have upgraded FTAI Aviation stock from Peer Perform to Outperform, following the company’s announcement of its Strategic Capital Investment plan.
In addition, Benchmark analysts have continued to endorse FTAI Aviation with a strong Buy rating, highlighting the company’s Strategic Capital Initiative (SCI) valued at over $3 billion. The SCI is expected to significantly transform the company’s market position. Stifel analysts have also reiterated a Buy rating on FTAI Aviation stock, with an increased price target, following the company’s announcement of its adjusted EBITDA guidance for 2025.
Finally, BTIG analysts have maintained their Buy rating on FTAI Aviation stock, increasing their price target following the company’s announcement of a strategic capital initiative. These recent developments reflect the evolving dynamics of FTAI Aviation’s financial and market position.
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