UPDATE: Citigroup Reiterates Buy Rating, Raises PT on Aercap Holdings
In a report published Friday, Citigroup reiterated its Buy rating on Aercap Holdings NV (NYSE: AER), and slightly raised its price target from $18.60 to $19.20.
Citigroup noted, “Having re-purchased a total of $282.7m of shares in the last 15 months, AER has Board authority to re-purchase another $104m's worth. At the current share price of $12.78, AER could theoretically re-purchase another 8.14m shares (6.5% of current share capital), which we estimate would be a further 7% accretive to annualized EPS. We are confident that AER will re-purchase more shares up to the current authorization as long as the share price remains below BVPS of $17.21 (end 2Q12 - or $18.19 estimated for end 3Q12). We note that Cerberus has a remaining shareholding of 10.7% (13.3m shares). Beyond this, we believe share re-purchases could be limited by (i) a potential increase in funding costs due to increased debt leverage; (ii) reduced liquidity of free float shares and therefore potential waning investor interest in the stock; and (iii) the reduced ability to pursue further aircraft acquisitions for growth. We note that it was recently reported that AER and AMR had agreed to a further 11 B737-800 sale and leasebacks. We would not rule out AER seeking a merger opportunity or taking itself private, although the recent re-purchase of Cerberus' shares may have reduced the probability of these events occurring. We expect strategic clarity at its investor day on September 12.”
Aercap Holdings NV closed on Thursday at $12.78.
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