UPDATE: Citigroup Reiterates Buy Rating, Lowers PT on Aircastle Limited

In a report published Monday, Citigroup reiterated its Buy rating on Aircastle Limited

, but slightly lowered its price target from $16.50 to $16.20. Citigroup noted, “AYR made a significant impairment charge in 3Q12 of $78.7m, covering 15 older generation aircraft (4xB767-300s, 1xA310F, 8xB737 classics and 2xA320 classics). We estimate the market value of these aircraft to be c.$110m, c.60% of the prior NBV of these planes. It also applied accelerated depreciation on 7 other aircraft, resulting in $838,000 higher depreciation in 4Q12 and $1.442m in 2013. There is therefore some justification for its share price to be 0.62x BVPS of $19.99. The current share price, however, is closer to our estimated market value of net assets (MVNA) of $12.11 per share. We estimate aircraft market values have declined by c.9% over the last 12 months, based on data provided by Aircraft Value Analysis Company (AVAC), including by c.5-6% in the last 6 months. AYR's relatively old aircraft and freighters have been particularly affected and these remain the main sources of further impairment risk, especially if there are more lessee defaults.” Aircastle Limited closed on Friday at $12.44.