On Tuesday, Compass Point maintained a positive outlook on Fortress Transportation (NASDAQ: NASDAQ:FTAI), raising its price target to $181 from $175, while reiterating a Buy rating on the stock. The firm's analyst highlighted the recent pullback in FTAI Aviation shares as an overreaction, suggesting it presents an attractive opportunity for investors to initiate or increase their positions in the company.
Fortress Transportation has been recognized for its strong positioning to continue its growth trajectory in the near to medium term. The company specializes in engine maintenance and overhaul solutions for CFM56/V2500 engines, a market that is anticipated to remain undersupplied in the coming years. FTAI's proprietary cost advantage in the CFM56 engine market, which is the largest in the world, has been underscored as a significant competitive edge.
During the third quarter of 2024, Fortress Transportation's Aerospace Products division saw substantial growth, onboarding 19 new clients, which represents a roughly 38% increase from the 50 clients reported in the second quarter. Additionally, the fourth quarter brought further advancements with FTAI's joint venture partner receiving approval for the second of five proprietary PMA parts.
The analyst from Compass Point anticipates that FTAI will continue to excel, especially as the company enters the seasonally strong fourth and first quarters. This period, coupled with the client growth experienced in the third quarter and the initiation of engine sales related to the V2500 engine portfolio earlier in 2024, positions FTAI for continued success.
The firm's Aerospace Products segment is expected to maintain its lead in the market due to its unique offerings and cost-saving solutions.
The revised price target of $181 is based on a multiple of 16.0 times the firm's forecasted FY26E EBITDA of $1,313.8 million, an increase from the previous multiple of 15.5 times.
The analyst emphasized that the recent dip in share price offers a unique chance for investment, after a year marked by minimal pullbacks, and supports the decision to reaffirm the Buy rating and adjusted price target.
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