On Monday, Stifel adjusted its stance on Fortress Transportation (NASDAQ:FTAI), downgrading its rating from Buy to Hold, despite increasing the price target to $59 from $40.
The adjustment follows Fortress Transportation's recent performance, where the company exceeded expectations by selling more modules than anticipated and achieving better utilization of its leasing portfolio.
Fortress Transportation also announced plans to expand its services to include the V2500 engine, a move that is expected to increase module sales, albeit at potentially lower margins. This new service offering is similar to the company's existing service for the CFM56 engine.
The revision of the price target reflects the application of 2026 estimates and a valuation based on these future numbers.
"Despite rolling out 2026 estimates and moving the valuation to those numbers, which assumes all PMA part approvals, we view the stock as having run as far as it can until PMA is approved," said the analyst.
The analyst pointed out that while the aerospace segment of Fortress Transportation has the potential for significant outcomes that could elevate the stock value further, and the momentum in the stock is strong, the current valuation suggests that the risk/reward balance is no longer as attractive.
InvestingPro Insights
Fortress Transportation (NASDAQ:FTAI) has been making waves in the market with some notable movements and metrics. According to InvestingPro data, the company boasts a market capitalization of $5.8 billion, reflecting its substantial footprint in the industry. The stock's P/E ratio, sitting at 27.44, suggests that it trades at a premium relative to its earnings. However, when considering the P/E ratio adjusted for the last twelve months as of Q4 2023, which is slightly lower at 25.75, it appears to be more attractively priced relative to near-term earnings growth.
InvestingPro Tips reveal that Fortress Transportation has experienced significant returns, with an impressive 134.03% one-year price total return. This is complemented by a strong three-month price total return of 38.52%, underscoring the stock's recent performance momentum. Investors should note that the stock's price is currently at 96.53% of its 52-week high, indicating that it is trading near its peak levels over the past year. This aligns with the analyst's view that the stock has reached its potential for the time being.
For those considering Fortress Transportation as an investment opportunity, the InvestingPro platform offers additional insights, including a total of 14 InvestingPro Tips for FTAI, which can help investors make more informed decisions. To access these tips and more detailed analytics, investors can visit InvestingPro and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
With the next earnings date slated for April 30, 2024, and a fair value estimate by analysts at $52, compared to InvestingPro's fair value estimate of $59.42, investors will be keen to monitor the company's performance as it continues to expand its services and navigate the competitive aerospace sector.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.