Avation PLC (LON:AVAP), a dynamic commercial aircraft leasing company, is showing considerable promise for investors. Despite the challenges in the aviation sector, Canaccord Genuity’s analyst Damian Brewer has reaffirmed a “Buy” rating on Avation’s shares, with an adjusted target price of 255p. The recommendation reflects confidence in Avation’s fleet strategy and the potential for equity expansion in a recovering aviation market.
According to Brewer, Avation currently trades at a substantial discount of over 50% to its Net Asset Value (NAV), offering an attractive entry point for investors. As of the end of fiscal year 2024, Avation reported a NAV per share of 362 cents (or £2.85), underscoring a noteworthy value gap. Brewer elaborates, “We think Avation continues to benefit from exposure to structural aviation growth and lessors gaining an increasing share of airline fleets.”
Avation’s performance has been solid, with fiscal 2024 revenues holding steady at $92.4 million and net debt reduced from $731 million in 2023 to $651.5 million, highlighting an improved balance sheet. Avation’s young, diverse fleet is fully utilised, positioning the company to continue meeting strong aviation demand. With a mix of popular narrowbody aircraft like the A220 and A320/321 models, Avation is well-placed to benefit from “rising rates on equivalent aircraft” and an anticipated growth in lease rates.
Looking ahead, Avation’s strategy is focused on fleet optimisation, with plans to add new ATRs and shift towards lower CO2 emissions through aircraft like the A220 and A320NEO, aligning with global sustainability goals. Brewer notes that “cost control in personnel and administrative costs” has already been effective, and this commitment will help Avation improve profitability as its fleet grows.
The company is also well-positioned to take advantage of structural industry shifts, with airline fleets increasingly relying on lessors due to high aircraft acquisition costs and limited supply. The analyst projects more than 7% EBITDA growth through 2030 for Avation, supported by airline seat demand and the need for fleet expansion across key markets like Asia and Australasia.
Final Thoughts
With stable operational performance, strategic fleet expansion, and a strengthened balance sheet, Avation PLC stands out in the aircraft leasing market. Canaccord Genuity’s continued “Buy” rating reflects optimism that Avation’s valuation gap will close, delivering attractive returns for investors. As Brewer highlights, the company’s disciplined approach and potential for equity growth make it a compelling prospect in a sector poised for structural expansion.
