Credit Suisse Sticks to Its Buy Rating for Aercap Holdings

By Ryan Adsit

Credit Suisse analyst Moshe Orenbuch reiterated a Buy rating on Aercap Holdings (NYSE: AER) on May 22 and set a price target of $56. The company’s shares closed yesterday at $45.03.

Orenbuch wrote:

“We view AerCap’s fleet growth as positive, especially for the company’s multiple, while we also acknowledge the potential for slightly softening lease rates which is probably the largest risk to our estimates, rating and target price. Order book will provide significant growth: We believe that AER’s order book could help investors view AER’s shares as more GARP-like than value- like which could cause an upward rerating. AER’s fleet grew year over year by 1% in ’15, -2% in ’16 (as management sold planes and repurchased shares aggressively) and we forecast +8% in ’17 and +12% in ’18. Lease rates and concern over lease rates still represent risk: We believe that the lessors would trade at higher multiples if investors had more confidence that accelerating narrowbody production rates would not pressure lease rates. Lessor multiples have been impacted by macro factors such as widebody weakness, concerns over China, rising interest rates, and production rates which can impact lease rates and values.”

According to TipRanks.com, Orenbuch is a 4-star analyst with an average return of 7.3% and a 63.2% success rate. Orenbuch covers the Financial sector, focusing on stocks such as Discover Financial Services, Credit Acceptance Corp, and Santander Consumer USA.

Currently, the analyst consensus on Aercap Holdings is Strong Buy and the average price target is $56.75, representing a 26.0% upside.

In a report issued on May 9, RBC Capital also reiterated a Buy rating on the stock with a $74 price target.

Based on Aercap Holdings’ latest earnings report for the quarter ending March 31, the company posted quarterly revenue of $1.21 billion and quarterly net profit of $261 million. In comparison, last year the company earned revenue of $1.31 billion and had a net profit of $223 million.

Based on the recent corporate insider activity of 16 insiders, corporate insider sentiment is negative on the stock. Earlier this month, James Chapman, a Director at AER sold 4,000 shares for a total of $178,320.

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AerCap Holdings NV engages in aircraft leasing and aviation finance. It acquires new or used commercial aircrafts and lends them to its clients via operating leases. It also provides aircraft owners, financiers and investors with asset services to manage an aircraft portfolio. It operates through the Leasing, Financing, Sales, and Management of Commercial Aircraft and Engines segment. The company was founded in 1995 and is headquartered in Dublin, Ireland.