On Thursday, Deutsche Bank (ETR:DBKGn) maintained a Buy rating on Fortress Transportation (NASDAQ:FTAI) and increased the price target to $100 from $90. The firm's decision followed an announcement made on Wednesday by FTAI about a significant maintenance services agreement.
Fortress Transportation has entered into a five-year maintenance services contract with International Aero Engines (IAE) to provide V2500 engines. The agreement stipulates that FTAI will source over 100 V2500 engines for full performance restoration shop visits on behalf of IAE. IAE is a consortium that includes industry leaders Pratt & Whitney, Japanese Aero Engines Corporation, and MTU Aero Engines (OTC:MTUAY) AG, known for manufacturing the V2500 engine model.
The bank predicts that FTAI could supply approximately 20 V2500 engines to IAE during the latter part of 2024 and about 40 engines in 2025. Based on these projections and the anticipated additional sales from the IAE contract, Deutsche Bank has revised its EBITDA forecasts for FTAI upwards. The estimated EBITDA for 2024 has been adjusted from $693 million to $729 million, and the forecast for 2025 from $801 million to $885 million.
This new agreement and the subsequent financial adjustments have led to the revised price target for FTAI shares. Deutsche Bank reiterated its confidence in the stock by reasserting the Buy rating alongside the new price target.
In other recent news, Fortress Transportation has been making significant strides in the industry. The company has secured a five-year maintenance service agreement with IAE AG for V2500 engines, a deal that RBC Capital Markets believes will solidify Fortress Transportation's leadership in the V2500 sector. This agreement is expected to contribute positively to the company's Aerospace Products EBITDA, particularly in the years 2025 and 2026.
In a move to expand its global customer base, Fortress Transportation, through its subsidiary FTAI Aviation, has announced its intent to acquire Lockheed Martin (NYSE:LMT) Commercial Engine Solutions from Lockheed Martin Canada for $170 million. This acquisition is expected to bolster FTAI's Maintenance, Repair, and Exchange (MRE) business and expand its global module customer base.
Analysts have responded positively to these developments. RBC Capital Markets, Deutsche Bank, and Compass Point have all increased their share target for Fortress Transportation, maintaining an Outperform and Buy rating respectively. This comes after Fortress Transportation's decision to end its external management and advisory agreement with Fortress Investment Group, transitioning to an internally managed structure.
Finally, FTAI Aviation has initiated a public offering of 2,090,561 ordinary shares, with Citigroup acting as the sole underwriter. The proceeds from this offering will go entirely to the Selling Shareholders. These recent developments highlight the dynamic moves Fortress Transportation is making in its sector.
InvestingPro Insights
Fortress Transportation (NASDAQ:FTAI) demonstrates robust financial health and growth potential, as reflected in the real-time data from InvestingPro. With a market capitalization of $8.29 billion and an impressive revenue growth of 32.49% in the last twelve months as of Q1 2024, FTAI is solidifying its position in the market. The company's gross profit margin stands at a notable 49.19%, underscoring efficient operations and cost management. Additionally, the substantial 1-year price total return of 203.71% indicates the stock's exceptional performance and investor confidence.
InvestingPro Tips highlight FTAI's perfect Piotroski Score of 9, suggesting robust financial health, and analysts have revised their earnings upwards for the upcoming period, reflecting optimism in the company's future profitability. Furthermore, with analysts predicting profitability this year and a strong return over the last three months, FTAI's outlook is positive. For more detailed analysis and additional InvestingPro Tips, visit https://www.investing.com/pro/FTAI. Subscribers can access over 15 additional tips to gain a more comprehensive understanding of FTAI's potential. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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