Avation Shares: Potential Catalysts on the Horizon

Canaccord Genuity maintained a Buy rating on commercial passenger aircraft leasing business Avation (LON: AVAP) in a note this week, despite lowering its target price for the stock to 255p a share.

The firm's analysts told investors that they believe that Avation's shares are undervalued, given the company's strong financial performance and positive outlook.

They note that Avation exited FY24 with a fleet of 34 aircraft and revenues of $92.4 million. Net debt was reduced to $651.5 million, and net asset value per share came in at $3.62.

Canaccord expects further improvement in FY25 before the company accelerates fleet growth in FY26.

The Canadian bank highlighted several positive developments for Avation in its note, including strong control of administrative costs, an improved balance sheet, and a reduced risk profile.

Canaccord also noted that Avation is well-positioned to benefit from the growing demand for commercial aircraft leasing.

“We think Avation continues to benefit from exposure to structural aviation growth and lessors gaining an increasing share of airline fleets,” said the firm.

“We see >7% EBITDA 2024-30E CAGR, expanding NAV (which lags fleet growth), and equity expansion in the EV.”

Looking ahead, Canaccord believes that Avation's shares could be further supported by several potential catalysts.

These include the renewal of eight leases in FY26, which could offer opportunities for rental rate improvement, and the maturity of a bond in October 2026.

The analyst expects that a potential reduction in U.S. interest rates and a decrease in leasing risk could also improve the risk/reward profile for Avation's shares.