On Monday, Citi maintained its Buy rating on AerCap Holdings (NYSE:AER) and increased the shares target to $103.00 from the previous target of $98.00. The adjustment reflects an anticipated rise in lease revenue, which has been factored into the firm's financial model along with the first quarter results of 2024.
The updated forecasts by Citi for the global aircraft lessor now include earnings per share (EPS) estimates that have been revised from $10.24 for this year to $11.47, from $10.63 for the next year to $11.10, and from $11.43 in 2026 to $11.82. The new estimates represent a significant increase in expected earnings for AerCap over the next few years.
The rationale behind the price target increase is attributed to applying a 9.25x target multiple to the higher estimated EPS for 2025. This calculation method has led to the adjustment of AerCap's target price, signaling Citi's positive outlook on the company's financial performance.
The change in AerCap's price target comes after a thorough analysis of the company's first-quarter results of 2024 and its future revenue potential. Citi's revision of the EPS estimates indicates a strong performance trajectory for AerCap, considering the higher expected lease revenue.
The new price target of $103.00 reflects Citi's confidence in AerCap's growth prospects and the firm's belief in the company's value proposition as an aircraft leasing enterprise. The Buy rating alongside the increased price target suggests a favorable investment outlook for AerCap Holdings as per Citi's analysis.
InvestingPro Insights
In light of Citi's positive stance on AerCap Holdings, a glance at the real-time data from InvestingPro provides additional context for investors. AerCap's market capitalization stands at a robust $16.98 billion, and the company is operating with a very attractive price-to-earnings (P/E) ratio of 5.67, indicating a potentially undervalued stock compared to earnings. The P/E ratio adjusted for the last twelve months as of Q1 2024 is slightly higher at 7.69, but still suggests affordability. Furthermore, AerCap has demonstrated a substantial revenue growth of 10.53% over the last twelve months leading up to Q1 2024, reinforcing the positive outlook on its financial performance.
Two InvestingPro Tips highlight critical aspects of AerCap's corporate actions and valuation. Firstly, management has been aggressively buying back shares, which can be a signal of underlying confidence in the company's value and prospects. Secondly, AerCap is trading at a low earnings multiple, which may appeal to value investors seeking potential growth at a reasonable price. It is worth noting that there are 16 additional InvestingPro Tips available, offering a deeper dive into AerCap's financial health and market position for those interested in a comprehensive analysis.
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