On Wednesday, Air Lease Corporation (NYSE:AL) maintained its Buy rating and $56.00 price target according to a report from TD Cowen. The firm's assessment followed the release of Air Lease's third-quarter transaction activity report, which indicated that sales proceeds did not meet expectations. All aircraft sold during the quarter were narrow-body models, prompting TD Cowen to adjust their forecasts for the company.
The updated estimates by TD Cowen show a decrease in the expected aircraft sales revenue for the third quarter, now projected at $35 million, down from the initial $50 million forecast. Additionally, the diluted earnings per share (EPS) estimate for Air Lease has been revised to $3.43 for the year 2024, and to $4.45 for 2025. These figures have been reduced from previous estimates of $3.56 and $4.50, respectively.
Despite these adjustments, TD Cowen has chosen to maintain the price target for Air Lease at $56.00. This decision is based on the firm's valuation metrics, which include a multiple of 12.5 times the estimated earnings for 2025 and a 0.7 times price-to-book (P/B) ratio for the same year. The price target reflects the firm's continued confidence in the stock's potential.
The report from TD Cowen highlights the impact of the third-quarter sales on Air Lease's financial projections but does not alter the firm's long-term outlook on the company's stock value. Air Lease's performance and future earnings will continue to be monitored by investors following the adjustments in revenue and EPS forecasts.
In other recent news, Air Lease Corporation reported significant activities in its portfolio for the third quarter of 2024, including the delivery of 20 new aircraft and the sale of nine older planes. The company's investments in new aircraft total approximately $1.9 billion.
Additionally, Air Lease issued $300 million of 6.00% fixed-rate reset non-cumulative perpetual preferred stock, Series D, as part of its broader financing activities. The company also reported potential delays in Boeing aircraft deliveries due to a labor strike at The Boeing Company (NYSE:BA), the impact of which on the company's capital expenditures remains uncertain.
On the earnings front, Air Lease announced second quarter 2024 revenues of $667 million and diluted earnings per share of $0.81. Despite challenges such as OEM delivery delays, the company maintains a 100% utilization rate. Air Lease's forward order book is fully placed through 2025, and it anticipates full-year 2024 aircraft deliveries to be between $4.5 billion and $5.5 billion.
InvestingPro Insights
Air Lease Corporation's financial metrics and market performance offer additional context to TD Cowen's analysis. According to InvestingPro data, Air Lease's P/E ratio stands at 9.19, indicating that the stock is trading at a relatively low earnings multiple. This aligns with TD Cowen's maintained Buy rating, suggesting potential undervaluation.
The company's revenue for the last twelve months as of Q2 2024 was $2.71 billion, with a growth rate of 9.49%. This growth, coupled with a strong gross profit margin of 59.37%, underscores Air Lease's operational efficiency, which could support the $56 price target set by TD Cowen.
InvestingPro Tips highlight that Air Lease has raised its dividend for 11 consecutive years, demonstrating a commitment to shareholder returns. This consistent dividend growth, combined with the current dividend yield of 1.96%, may appeal to income-focused investors.
It's worth noting that InvestingPro offers 12 additional tips for Air Lease, providing a more comprehensive analysis for investors seeking deeper insights into the company's financial health and market position.
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