On Friday, Stifel analyst Frank Galanti increased the price target on shares of Fortress Transportation (NASDAQ: NASDAQ:FTAI) to $145.00, up from the previous $132.00, while maintaining a Buy rating on the stock. Galanti's adjustment comes even as the company's shares experienced a notable decline.
The analyst attributes the drop to the market's reaction to the company's hesitancy in providing financial guidance and the delay in the expected completion of the PMA project, now anticipated for 2025.
Fortress Transportation's stock suffered despite the company showing strong performance, with the decline believed to be linked to the adjusted timeline for the PMA project. Moreover, while the rate of module production has increased, the projected output of 400 modules for the next year falls short of market expectations.
This shortfall, coupled with the lack of disclosure on the number of modules sold, has made it difficult to track the company's progress, affecting market confidence and the stock's valuation.
Despite these challenges, the analyst remains optimistic about Fortress Transportation's prospects. The company has seen a surge in its aerospace segment, signing up 19 new customers during the quarter. This growth in clientele is seen as a positive indicator of the company's ongoing momentum.
Galanti's stance suggests that the current dip in Fortress Transportation's stock price represents an attractive entry point for investors. The company's continued business momentum, as evidenced by the expansion of its customer base, is expected to provide substantial tailwinds, potentially leading to a recovery in stock valuation. Stifel's revised price target reflects this sentiment, signaling a belief in the company's ability to overcome current market skepticism.
In other recent news, FTAI Aviation reported a robust Q3 in 2024, with an adjusted EBITDA of $232 million, marking an 8% increase from the previous quarter and a significant 50% rise from the same period last year.
The company's leasing segment and aerospace products contributed $136.4 million and $101.8 million to the EBITDA, respectively. In addition, a dividend of $0.30 per share was announced, payable on November 25, 2024.
FTAI Aviation is also actively expanding, with a notable increase in production at its Montreal facility and enhanced service offerings. The company onboarded 19 new customers and expects overall aviation EBITDA for 2024 to be between $860-$875 million. Furthermore, the V2500 engine program is progressing with strong demand and commitments from major airlines.
However, EBITDA margins for products fell to 34% due to low-margin legacy contracts, but normalization is expected by year-end. Notably, FTAI Aviation is managing proactive inventory to mitigate supply chain disruptions and is nearing the sale of offshore assets, expected to close in Q4.
These are among the recent developments for FTAI Aviation, providing investors with a clearer picture of the company's current financial standing and future plans.
InvestingPro Insights
Fortress Transportation's recent market performance aligns with several key insights from InvestingPro. Despite the stock's recent decline, InvestingPro data shows a remarkable 251.58% price total return over the past year, underscoring the company's strong market performance mentioned in the article. This is further supported by an InvestingPro Tip highlighting FTAI's "high return over the last year."
The company's revenue growth of 36.77% in the last twelve months, as reported by InvestingPro, corroborates the analyst's optimism about FTAI's business momentum. This growth is particularly evident in the 60.01% quarterly revenue increase in Q3 2024, which aligns with the article's mention of a surge in the aerospace segment and the addition of new customers.
However, investors should note that according to an InvestingPro Tip, analysts do not anticipate the company will be profitable this year. This insight may explain the market's cautious reaction to the lack of financial guidance and the delayed PMA project completion.
For a more comprehensive analysis, InvestingPro offers 11 additional tips for FTAI, providing investors with a deeper understanding of the company's financial health and market position.
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