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FTAI Aviation (NASDAQ:FTAI) late Sunday was downgraded to Hold from a previous investment rating of Buy among analysts at financial-services firm Stifel. They said the aircraft lessor and provider of jet-engine maintenance has become riskier in relation to the potential reward after a “spectacular run in the shares.”
FTAI’s (FTAI) stock has more than doubled in price from the 2022 low.
“The main reason for the downgrade is valuation,” Frank Galanti, analyst at Stifel, said in a February 25 report. “Clearly, times are good for both the leasing and the aerospace segment. However, in my view, expectations have already priced a pretty favorable upside.”
One source of uncertainty is when the U.S. Federal Aviation Administration will grant parts manufacturer approval for components used in jet-engine overhauls. The approval would help FTAI (FTAI) to cut costs.
“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,” according to Stifel.
The firm raised its price target on FTAI (FTAI) to $59 a share from $40 a share, based on a sum-of-the-parts valuation.
As a base case, Stifel estimated that FTAI’s (FTAI) aviation assets are worth $5.9 billion based on an estimated enterprise value that’s five to nine times earnings before interest, taxes, depreciation and amortization. The firm estimated FTAI’s (FTAI) aerospace segment is worth $4.9 billion based on an estimated enterprise value that’s 10 to 14 times ebitda.