RBC Capital Markets analyst Ken Herbert downgraded AerSale Corp (NASDAQ:ASLE) to Sector Perform from Outperform at a lowered price target of $15 from $20.
The analyst is bearish following worse-than-expected Q2 FY23 financial results and 2023 revenue guidance below estimates.
Revenue of $69.3 million missed the consensus of $86.98 million, and adjusted EPS loss of $(0.03) missed the consensus of $0.11.
AerSale lowered revenue outlook to $400 million -$440 million from $460 million – $490 million earlier (vs. consensus of $468.11 million) and adjusted EBITDA to $40 million – $55 million from $70 million – $80 million prior in 2023.
Herbert notes delays in asset sales and a softer cargo market have pushed around six 757 transactions into 2024.
The analyst lowered 2023 and 2024 adjusted EBITDA estimates to $44.9 million (from $71.7 million) and $60.2 million (from $83.3 million), respectively.
Also, Herbert reduced 2023 and 2024 adjusted EPS estimates to $0.67 (from $1.12) and $0.94 (from $1.34), respectively.
Nevertheless, the analyst is confident that management’s $200 million commitment to assets will drive revenues but sees incremental risk to margins and FCF from weakening cargo markets, working capital expenditure, and timing of asset sales.
Price Action: ASLE shares are trading lower by 25.5% at $10.86 on the last check Wednesday.
