On Thursday, BTIG adjusted its stance on flyExclusive (NYSE:FLYX), shifting the rating from Buy to Neutral following the stock's recent price surge. The private aviation company's shares were downgraded after achieving the previously set price target of $9, leading analysts to believe that the risk-reward profile is now balanced.
flyExclusive's stock has experienced a notable 39% increase over the past month, which has resulted in the company trading at a significant premium compared to its peers. Currently, flyExclusive's shares are at a 54% premium over Volato and a 47% premium over Wheels Up when evaluated on an enterprise value to estimated 2023 sales (EV/2023E Sales) basis.
The initial Buy rating was issued when flyExclusive's valuation was on par with Wheels Up, but it was considered undervalued by the analysts who saw flyExclusive as having a superior business model. With the stock's value rising, the near-50% premium it now holds against its closest competitors is deemed more fitting by the analysts.
In terms of absolute numbers, flyExclusive is trading at 22 times and 13 times the firm's fiscal year 2024 and 2025 adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) forecasts, respectively. These multiples are seen as a fair representation of the company's growth prospects.
The analysts have indicated that a more positive outlook on flyExclusive's shares could emerge if there is a substantial improvement in the company's fundamentals. However, the most recent data suggests a stable demand environment rather than a significant growth trend. Over the last four weeks, Part 91K/135 flights have seen a 1% decrease compared to the same period in 2023. Furthermore, ARGUS Analytics, a private industry watcher, predicts a 0.7% year-over-year decline in total flight activity for 2024, including Part 91 flights.
Moving forward, the firm will continue to monitor flight activity closely to determine whether the industry can integrate new jet deliveries without disruptions. The downgrade reflects a cautious approach based on current market valuations and industry data.
InvestingPro Insights
Following BTIG's adjustment of flyExclusive's (NYSE:FLYX) rating to Neutral, InvestingPro data and insights provide additional context to the company's current financial position and performance. flyExclusive's market capitalization stands at $660.18 million, reflecting its size in the private aviation market. Despite a significant return over the last month of 39.55%, the company's P/E ratio remains negative at -3.46 for the last twelve months as of Q3 2023, signaling that it has not been profitable during this period.
Notably, flyExclusive's stock has shown a strong return over the past week with a 16.47% increase, yet it's important to consider the InvestingPro Tips that the company is quickly burning through cash and may have trouble making interest payments on debt. These factors could impact the sustainability of its recent price performance. Additionally, analysts expect a decrease in net income this year, and the company does not pay a dividend, which might be significant for income-focused investors.
Investors considering flyExclusive should be aware that the company's stock generally trades with high price volatility and often moves in the opposite direction of the market, a pattern that could influence investment strategies. For those seeking a deeper analysis, InvestingPro offers 11 additional tips on flyExclusive, which can be accessed with the coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
As the market continues to evaluate flyExclusive's potential, these insights may help investors weigh the company's prospects against the backdrop of a challenging economic environment and a competitive private aviation sector.
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