Dahlman Rose Comments On Atlas Air Worldwide Holdings Following Disappointing Earnings

Atlas Air Worldwide Holdings (NASDAQ: AAWW) reported disappointing 1Q11 EPS down 69% vs last year and below Dahlman's and the consensus estimate. Management reaffirmed full year guidance of $5.30/share. Dahlman believes the current pullback in these shares is a buying opportunity.

Dahlman is estimating 2011 EPS of $5.41, down from a prior estimate of $5.56, but above current guidance of $5.30 as it believes Atlas Air has some great opportunities in its business in the next several quarters. A major opportunity this year is the military passenger business, which begins this quarter. Its preliminary EPS estimate for 2012 is $6.95 as Dahlman estimates at least the first three B747-8Fs will be in service for a full year.

Atlas Air reported 1Q11 net income of $10.5 million on revenues of $297.6 million. Revenues were up less than 1% and were disappointing, with the decline mostly due to an expected decline in military charter business. Dahlman continues to rate Atlas Air a Buy with a $72 price target based on 13.3x estimated 2011 EPS. It believes Atlas will grow earnings from several different sources: military passenger, commercial charter, addition of B747-8Fs and new ACMI customers. Dahlman would use the current pullback to either add to or establish positions.

AAWW closed Tuesday at $63.71