Aircastle Shares Surge After Upgrade

On Friday, the stock plummeted to its lowest point ever following a disappointing earnings report, finishing the day more than 12 percent lower.

The company said its fourth-quarter earnings surged 78 percent as sales doubled, but the profit figure fell short of what analysts had been expecting. Earnings per share came in at 46 cents per share 4 cents below analysts' average forecast, according to Thomson Financial.

Those results were "disappointing but not disastrous," Goldman Sachs analyst James Fotheringham said in a note to investors late Sunday. He upgraded the stock to "Buy" from "Neutral," calling the company "a defensive name within our otherwise-troubled coverage universe of mortgage and specialty finance stocks."

"Aircastle shares are down in-line with more credit and funding-sensitive names, despite solid industry fundamentals (i.e. lease rates and terms remain favorable)," he said. "We believe that market concerns about funding, growth and dividend safety are overdone."

Citi analyst Andrew Light agreed that last week's sell-off was overblown. He said earnings fell short mostly because of the timing of new acquisitions, and higher depreciation and one-time selling, general and administrative costs.

Light added that the stock is "significantly undervalued" in relation to other aircraft leasing companies. He rates it "Buy" with a price target of $33, down from $37 previously.

"We believe it should trade at a premium due to its new aircraft orders, servicing platform and higher" return on equity, he said.

Aircastle shares jumped $1.33, or 6.8 percent, to $20.83 in afternoon trading. The stock has traded as high as $41.31 in the past year, and last week set a new low of $18.14.