FBR Capital Upgrades Aircastle Limited (AYR) to Outperform
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FBR Capital upgraded Aircastle Limited (NYSE: AYR) from Market Perform to Outperform with a price target of $23.00.
Analyst Christopher Nolan commented, "We are raising our investment rating to Outperform following the sell-off in AYR shares following 3Q16's earnings miss. Lower-than-expected gains on sale masked positive operating trends for AYR in 3Q16, which we believe will result in ROE and ROA continuing to improve in coming quarters. We think this improved profitability outlook was the impetus for AYR to increase its quarterly dividend (to $0.26/share from $0.24/share) with 3Q16 earnings. At current valuations, this translates to a 5.5% dividend yield. Not bad for a stock trading at 84% of 3Q16 book value/share of $22.70, of which approximately one-third is comprised of unrestricted balance sheet cash. We are lowering our 2016 EPS estimate on lower-than-expected 3Q16 results but raising our 2017 estimates. We are maintaining our $23 PT, which together with the higher dividend implies a potential 27% total return over the next 12 months."
Shares of Aircastle Limited closed at $18.87 yesterday.
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