BATON ROUGE, La., Nov. 17, 2021 /PRNewswire/ -- Prescience Point Capital Management, a research-focused, catalyst-driven investment firm that seeks to earn superior risk-adjusted returns uncorrelated to the broader market, today reiterated its Strong Buy recommendation on AerSale Corporation (Nasdaq: ASLE) ("AerSale" or "the Company") and expressed confidence in its price target of $47.00.
A copy of Prescience Point's new research report on AerSale, a leading provider of aftermarket aircraft services and equipment, can be found HERE.
Following the release of AerSale's Q3 2021 earnings report on November 9th, Prescience Point continues to believe that AerSale is one of the most attractive and obvious investments that it has ever seen. Despite the delay of key catalysts related to AerAware to early next year, the Company is still on track to generate a run-rate of around $2.00 of adjusted EPS, on a fully diluted basis, by the end of 2022, which is more than double what it is projected to earn in 2021.
"We are even more confident in our investment in AerSale today than we were prior to the Q3 earnings report," said Eiad Asbahi, Founder and Portfolio Manager of Prescience Point. "For the reasons noted in our latest report, we reiterate our Strong Buy recommendation and price target of $47, and we continue to believe that the Company's shares will eventually exceed $100 over the long-term," he added.
Mr. Asbahi noted that information provided by AerSale management in the Q3 earnings report confirmed or strengthened most of the key points of Prescience Point's long-term thesis, specifically:
- FAA approval of AerAware was confirmed to be a near certainty. During the Q3 conference call, AerSale management said that, despite delays in the certification process for its AerAware wearable head-up display (HUD) technology, completion of the process is expected before the end of February 2022 and final FAA approval should be granted shortly thereafter. AerSale management stated, "We're highly confident it's not a matter of if, rather it's only a matter of when we will receive an AerAware STC (Supplemental Type Certificate)." If AerAware is approved in Q2 of next year, as management claims it is almost certain to be, the Company will be first-to-market with the only viable wearable HUD solution for the commercial airline market. The game-changing AerAware technology will significantly reduce delays and diversions by enabling commercial airline pilots to see through inclement weather such as snow, rain, sleet and fog.
- A large initial order for AerAware was confirmed to be highly likely. During prior earnings calls and investor presentations, AerSale management has repeatedly indicated that it expects to receive a large order for AerAware from a major domestic airline upon receipt of FAA approval. During its Q3 conference call, AerSale management confirmed this once again, and predicted that an initial order for AerAware would be in the range of 250 units. Assuming that AerSale is able to fulfill the entire 250 unit order over a 12-month timeframe, Prescience Point projects that this initial order would contribute an additional $0.80 of EPS, almost doubling the Company's annual earnings.
- Multiple, additional STCs are currently in process for AerAware. During its Q3 earnings call, AerSale management disclosed that it is currently working on multiple, additional STCs for AerAware beyond the Boeing 737 and is in the process of engineering the integration of the product into the Airbus A318, A319, A320 and A321. These additional STCs will greatly expand the addressable market for this product.
- AerSale projects a significant rebound in financial performance In Q4 2021. While the Company's Q3 results were below expectations, this was largely the result of "lumpy" timing for sales of its fleet of converted Boeing 757 cargo planes, and not due to any deterioration in the fundamentals of the business. This conclusion is supported by management's projection of a strong rebound in financial performance in Q4 2021. Based on the midpoint of AerSale's revised full-year adjusted EBITDA guidance of $85 million and the $60.7 million of adjusted EBITDA generated through the first three quarters of 2021, the Company projects that it will generate almost $25 million of adjusted EBITDA in Q4 2021.
- The core business is poised to accelerate further in 2022. Prescience Point expects AerSale's core business to grow significantly in 2022 due to several major tailwinds. First, the Company will greatly benefit from the monetization of its remaining fleet of 757s. Prescience Point projects that the Company will still have 13, or more than half, of its fleet of 757s remaining at the end of 2021. Given that ASLE already has all but three of its remaining 757s under contract or LOI, Prescience Point expects all 13 of these remaining planes will be monetized in FY 2022. Second, during its Q3 earnings call, management disclosed that it is starting to see an increase in the number of used aircraft available for sale at attractive prices, which could lead to opportunities for further growth in the Company's core business as these assets are acquired and then monetized via leasing, whole asset sales and the sale of parts. Finally, AerSale should benefit from the continued recovery in domestic and international airline traffic, which should drive a significant increase in demand for the Company's products and services.
This material does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein in any state to any person. In addition, the discussions and opinions in this press release are for general information only and are not intended to provide investment advice. All statements contained in this press release that are not clearly historical in nature or that necessarily depend on future events are "forward-looking statements," which are not guarantees of future performance or results, and the words "anticipate," "believe," "expect," "potential," "could," "opportunity," "estimate," and similar expressions are generally intended to identify forward-looking statements. The projected results and statements contained in this press release that are not historical facts are based on current expectations, speak only as of the date of this press release and involve risks that may cause the actual results to be materially different. Certain information included in this material is based on data obtained from sources considered to be reliable. No representation is made with respect to the accuracy or completeness of such data, and any analyses provided to assist the recipient of this presentation in evaluating the matters described herein may be based on subjective assessments and assumptions and may use one among alternative methodologies that produce different results. Accordingly, any analyses should also not be viewed as factual and also should not be relied upon as an accurate prediction of future results. All figures are unaudited estimates and subject to revision without notice. Prescience Point disclaims any obligation to update the information herein and reserves the right to change any of its opinions expressed herein at any time as it deems appropriate.
About Prescience Point Capital Management
Prescience Point Capital Management is a research-focused, catalyst-driven investment firm that seeks to earn superior risk-adjusted returns uncorrelated to the broader market. Unlike traditional investment strategies, we are unconstrained and can opportunistically invest globally, across asset classes, industry verticals and capital structures. Whether investing in misunderstood distressed assets, creating value through shareholder activism, or uncovering fraud, we seek to capitalize on opportunities that others miss or fall outside the rigid mandates of most investment firms.
Our uniqueness resides in our unconventional thinking, deep research, intellectual curiosity and willingness to go against the prevailing wisdom.
The firm was founded by investor Eiad Asbahi in 2009 and is headquartered in Baton Rouge, LA.
Prescience Investment Group, LLC is a member of the Financial Industry Regulatory Authority, CRD number 152721.
SOURCE Prescience Point Capital Management