What Happened?
Shares of aircraft leasing company FTAI Aviation (NASDAQ:FTAI) jumped 6.3% in the morning session after Wolfe analyst Myles Walton upgraded the stock's rating from Hold to Buy and assigned a price target of $190. The new price target represents a potential 10% upside from where shares traded before the upgrade was announced. The upgrade is based on the potential for earnings to increase as the analyst discounted some initial concerns regarding the business following the announcement of FTAI's strategic Capital Investment in the previous week.
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What The Market Is Telling Us
FTAI Aviation’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 10 days ago when the stock gained 15.2% on the news that the company provided encouraging financial guidance for fiscal 2025, with the midpoint of its EBITDA outlook roughly 5% ahead of Wall Street's Consensus estimates (midpoint of $1.125bn vs. expectations of $1.075bn).
Separately, the firm announced a 'Strategic Capital Initiative'. The first partnership under the initiative will focus on acquiring 737NG and A320ceo aircraft, which could be an opportunity for FTAI to deploy $3+ billion of capital annually.
The second part introduces an "asset-lite" initiative in partnership with third-party institutional investors, who will acquire on-lease narrowbody aircraft from FTAI. As part of this strategy, FTAI has already agreed to sell 46 on-lease narrowbody aircraft for $549 million to the first partnership. Despite the aircraft changing hands, FTAI will continue to maintain and repair the engines, ensuring a steady flow of business and additional revenue streams.
Finally, South Korea's plan to inspect all Boeing 737-800 jets operated by its airlines—after a devastating crash on December 29, 2024—opens the door for potential recalls or mandatory modifications. Such measures could be a tailwind to FTAI's business. For example, regulatory actions against Boeing or required modifications of aircraft could slow production of new aircraft, thereby extending the operational life of older planes that need more maintenance and repair work.
FTAI Aviation is up 24.6% since the beginning of the year, and at $180.36 per share, has set a new 52-week high. Investors who bought $1,000 worth of FTAI Aviation’s shares 5 years ago would now be looking at an investment worth $9,474.
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