On Friday, RBC Capital began coverage on shares of Fortress Transportation (NASDAQ: NASDAQ:FTAI), assigning an Outperform rating and setting a price target of $85.00. The firm highlighted the company's strong position in the engine lease and maintenance sector, poised to capitalize on growing demand for legacy engine utilization and maintenance.
Fortress Transportation, recognized for its engine leasing and maintenance arbitrage, is anticipated to experience an uptick in EBITDA, particularly with the expected introduction of CFM56 PMA parts in the years 2025 and 2026. These parts are predicted to provide a significant boost to the company's financial performance.
RBC Capital's price target is grounded in a sum-of-the-parts valuation method. This approach applies a 9.0x multiple to the Aviation Leasing segment and a 16.0x multiple to the Aerospace Products division of Fortress Transportation. The valuation reflects the firm's confidence in the growth prospects of both business units.
The Outperform rating indicates that RBC Capital expects the stock to perform better than the average return of the stocks the firm covers. This optimistic outlook is based on the company's strategic positioning and potential for future earnings growth.
InvestingPro Insights
In light of RBC Capital's optimistic outlook on Fortress Transportation (NASDAQ: FTAI), current InvestingPro data and tips add further dimensions to the company's profile. With a market capitalization of $7.57 billion and a high Price/Earnings (P/E) ratio of 35.5, Fortress Transportation stands out in the engine lease and maintenance sector. The company's gross profit margin impressively sits at 49.19%, showcasing its efficiency in generating revenue over the last twelve months as of Q1 2024.
Adding to the company's financial robustness, InvestingPro Tips highlight that Fortress Transportation has a perfect Piotroski Score of 9, indicating a very healthy financial state. Moreover, two analysts have revised their earnings upwards for the upcoming period, suggesting a positive sentiment around the company's future performance. These metrics are particularly relevant to investors considering the company's strategic positioning and growth potential as outlined by RBC Capital.
For those seeking a deeper dive into Fortress Transportation's financials and future outlook, InvestingPro offers additional tips, including insights into the company's earnings multiple and stock price volatility. Subscribers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a total of 16 InvestingPro Tips that further detail the company's financial health and projections.
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