DA Davidson Starts Erickson Air-Crane (EAC) at Buy; Niche Aerospace Play

DA Davidson initiates coverage on Erickson Air-Crane (NASDAQ: EAC) with a Buy. PT $10.00.

DA analyst, said, "The main catalyst for growth is the sale of additional Air-Cranes manufactured by the company. We estimate each additional sale contributes ~$30 million in sales and $10 million in operating income. Currently, the company has one Air-Crane under a non-binding letter of intent. We see the signing of additional deals and the building of a manufacturing backlog as a major catalyst for the stock. The market for the Air-Crane appears to be roughly 2-4 per year based on sales of a competing aircraft model."

"We have established a 2012 EPS estimate of $0.75 on revenue of $161.6 million. We have assumed that revenue grows 5.8% in 2012 as new contract awards drive revenue growth. We have not assumed any Air-Crane sales in our 2012 model. For 2013 we have assumed Aerial Services revenue growth of 4.1% and one Air-Crane sale for total revenue of $196.0 million, an increase of 21% over 2012. Our EPS estimate for 2013 is $1.65."

For an analyst ratings summary and ratings history on Erickson Air-Crane click here. For more ratings news on Erickson Air-Crane click here.

Shares of Erickson Air-Crane closed at $7.02 yesterday.

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